• June 18, 2024
  • Stocks

US500 (S&P 500): Upcoming Correction Towards Key Demand Zone

  • Bearish Scenario: Sell below 5481 with TP1: 5451.81 and TP2: 5437, with S.L. above 5495 or at least 1% of account capital.
  • Bullish Scenario: Buy above 5436 with TP1: 5500 and TP2: 5535.20, with S.L. below 5426 or at least 1% of account capital. Apply trailing stop.

Fundamental Analysis

The significant increase in stock buybacks by S&P 500 companies in Q1 2024 has generated optimism among investors. Buybacks increased by 8.1% compared to Q4 2023, which has contributed to higher stock prices, strengthening the index. Additionally, the tech sector has shown solid performance, with companies like Apple and Applied Materials reporting notable price increases, positively affecting the overall index. For instance, Apple saw a 1.97% rise, while Applied Materials rose by 2.46% in recent sessions.The recent increase in the S&P 500 is due to positive news about innovation and growth prospects in the tech sector. This has led to renewed confidence in the strength and resilience of the major companies in the index.

Technical Analysis

US500, H2


- Average Daily Range (ADR) High: 5535.20

- Average Daily Range (ADR) Low: 5435.70

- Supply Zones (Sells): 5484.64

- Demand Zones (Buys): 5436.93

Yesterday's price surge reached a new all-time high of 5497.91, from which a correction is expected below the daily opening (D1:O), as long as the price can move below the current volume concentration around 5484.64.

Bearish Correction:

The primary scenario is a bearish correction below 5481 with targets at 5452 and 5437 more extended. The latter represents an important demand zone where the weekly opening, the average bearish range, and yesterday's uncovered Point of Control (POC) converge. The bulls may defend this demand zone to produce a renewed surge.

Bullish Continuation:

Purchases will reactivate after the necessary pullback to the aforementioned buy liquidity zone, targeting the round level of 5500 and the average bullish range of 5535.20 in the short term.

The last relevant intraday support is located at 5426.81, implying that as long as this level is not broken, we will continue observing the price surge.

Uncovered POC: Point of Control: It is the level or zone where the highest volume concentration occurred. If there was a previous downward movement from it, it is considered a sell zone and forms a resistance area. Conversely, if there was a previous upward impulse, it is considered a buy zone, usually situated at lows, forming support areas.


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Author: Tibisay Ramos