S&P 500 Falls from Record High in Anticipation of Key News

On Friday, at 15:30 GMT+3, the Core PCE Price Index values will be released – an economic indicator to which the Federal Reserve pays special attention when assessing inflation levels in the US. This event is likely to cause a surge of news in the financial markets, and its anticipation will influence sentiments throughout the week.

On Monday morning, the S&P 500 Index (US SPX 500 mini on FXOpen) fell to 5465 points after a historical record above 5500 points was set on June 20th. The decline was contributed by Friday’s report from the National Association of Realtors, which showed a drop in existing home sales in May compared to the previous month.

Technical analysis of the daily chart of the S&P 500 Index (US SPX 500 mini on FXOpen) shows that:
→ the price is in a large upward trend that began last year;
→ the price is near the upper boundary of this channel;
→ the price has fallen below the psychological level of 5500;
→ the price is still in the June upward trend (shown in green);
→ the RSI indicator points to some market overbought conditions.

Given these facts, it is reasonable to assume that the S&P 500 Index (US SPX 500 mini on FXOpen) is in a vulnerable position for a pullback from the resistance block formed by the psychological level of 5500 and the upper boundary of the channel. The June upward trend may be broken.

Moreover, a possible correction might take on a threatening character if Friday’s news shows that US inflation is not slowing down – which would strengthen market participants’ belief that the period of high rates will last longer than expected.

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