As the S&P 500 chart shows (US SPX 500 mini on FXOpen), the index touched 6,990 yesterday, marking an all-time high for the first time. The psychological 7,000 level is now within close reach. Optimism may be driven by the start of the earnings season, which could confirm continued growth in corporate profits.

But is the outlook entirely positive?

From a fundamental perspective, several factors could raise concerns:

→ News surrounding a criminal case involving Jerome Powell. This may be perceived as pressure on the Fed Chair and a threat to the central bank’s independence, potentially undermining the investment climate.

→ The upcoming release of CPI data (scheduled for today at 16:30 GMT+3). A scenario in which the figures point to rising inflation cannot be ruled out, which could trigger a sharp sell-off in equity markets.

→ Risks of the US becoming involved in new military conflicts.

From a technical standpoint, bearish signals are also emerging on the chart.

Technical analysis of the S&P 500

Price action in the S&P 500 (US SPX 500 mini on FXOpen) is forming an ascending channel. However, it is worth noting the market’s reaction after reaching the upper boundary of this channel: on two occasions (as indicated by the arrows), the index has seen sharp pullbacks towards the median line. This behaviour suggests aggressive selling pressure. At the same time, the RSI indicator is showing bearish divergence.

The channel median has so far acted as solid support. Nevertheless, with bears successfully defending the psychological 7,000 level and the fundamental backdrop capable of delivering negative surprises, sharper declines in the S&P 500 cannot be ruled out.

In such a scenario, potential downside targets may include:
→ the 6,888 support level, where the red trendline was broken;
→ the lower boundary of the ascending channel.

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