Stock Traders Comb Charts for Clues to Next S&P 500 Move

In recent days, U.S. stock markets have been on a rollercoaster ride, with sharp swings largely fueled by President Donald Trump’s shifting stance on tariffs. The ongoing volatility has left many investors and analysts frustrated, uncertain about where the market is headed next.

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However, for technical analysts like Daniel Kirsche of Jefferies, these turbulent conditions have made the study of chart patterns and price levels even more critical. According to Kirsche, there’s one key level traders should be watching closely right now: 5,500 on the S&P 500 Index. This level is important because it marks the halfway point of the nearly 19% decline the benchmark index experienced after peaking in February.

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Since dipping below 5,000 a couple of weeks ago—and flirting with bear market territory—the S&P 500 has managed a gradual recovery, now hovering around 5,376. A climb above 5,500, which would mean a bit more than a 2% gain from its latest close, could mark a turning point. Not only would it erase almost all of the losses from April, but it would also suggest a change in investor behavior, from selling during brief recoveries to buying when the market dips.

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Kirsche emphasized that repeated tests of a resistance level like 5,500 increase the chances that the market will eventually break through it. If that happens, he believes the index could quickly rebound to the 5,800–6,000 range—a level that seemed ambitious not long ago but now looks within reach if momentum shifts decisively.

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For those concerned about potential downside risks, key support levels are also in focus. One such level is 4,800, which sits about 3.5% below the S&P 500’s lowest point so far this year. Jason Hunter, a strategist at JPMorgan Chase, views this area as vulnerable to renewed selling. He even suggests that the market could dip as low as 4,500, a decline he believes might help establish a more stable and lasting bottom.

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John Kolovos, chief technical strategist at Macro Risk Advisors, also sees 4,800 as a possible support zone. However, given the current downward trend, he believes there’s a higher probability the index could fall to 4,700. In a more bearish scenario, he wouldn’t rule out a deeper retreat toward 4,480 or even 4,300.

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Beyond these key levels, analysts are also paying close attention to broader indicators of market health—specifically, market breadth. This term refers to how many individual stocks are participating in a rally. A higher number of advancing stocks can signal that the uptrend is gaining strength and might be more sustainable.

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Currently, around 31% of S&P 500 companies are trading above their 200-day moving average—a significant improvement from the less than 20% seen earlier this month.

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While that increase is a positive sign, it still falls short of what market optimists, or “bulls,” would like to see. JC O’Hara, chief technical strategist at Roth Capital Partners, notes that bulls would prefer to see at least half of the index’s stocks trading above that long-term average to confirm the rally’s strength.

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Another widely used metric among technical analysts is the relative strength index (RSI). This indicator helps gauge whether a stock—or in this case, the broader market—is overbought or oversold. In early April, the RSI for the S&P 500 dropped below 30, which typically suggests that selling pressure has become overdone. Since then, the market has rebounded, but the RSI hasn’t yet climbed into overbought territory, usually considered to be above 70.

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According to Kirsche, the current RSI level indicates there’s still plenty of room for the index to rise without becoming overheated. That could give bulls more confidence that the rebound still has legs, especially if more stocks continue to participate and key resistance levels are broken.

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In short, while uncertainty continues to hang over the markets due to macroeconomic concerns and policy shifts, technical analysts are finding clarity in the charts. With levels like 5,500 and 4,800 in sharp focus, the next moves by the S&P 500 could provide a clearer sense of direction—either toward a new upswing or deeper correction.

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