The S&P 500 Keeps Hitting Record Highs. Investors Should Monitor These Critical Levels

Source: TradingView.com

Key Takeaways

The S&P 500 hit a fresh record high Monday morning at the start of a busy week that includes high-stakes trade talks, the Federal Reserve's decision on interest rates, and a wave of earnings reports from major technology companies. The index has traded higher within an ascending broadening formation since late May, recently finding support near the pattern’s lower trendline and 50-day moving average. A continuation of the S&P 500's current uptrend could see a rally toward the ascending broadening formation's upper trendline near 7,075. Major support levels lie on the chart around 6,600, 6,500 and 6,360.

The S&P 500 (SPX) hit a fresh record high early Monday at the start of a busy week that includes high-stakes trade talks, the Federal Reserve's decision on interest rates, and a wave of earnings reports from major technology companies.

The benchmark index surged Friday after a tamer-than-expected September inflation data reinforced expectations that the Fed's policy committee will cut the benchmark rate at the end of its two-day meeting on Wednesday. Progress on trade talks between the U.S. and China, ahead of a meeting later this week between President Donald Trump and Chinese President Xi Jinping is boosting sentiment this morning. Meanwhile, investors are preparing for the busiest earnings week of the quarter, highlighted by reports from Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).

The S&P 500 was up nearly 1% at 6,850 in the opening minutes of Monday's session. The index has gained about 40% since hitting its low for the year in early April and is up 15% since the start of the year, boosted by strong corporate earnings, investor enthusiasm about AI stocks, and expectations for further rate cuts by the Fed.

Below, we take a closer look at the S&P 500’s chart and apply technical analysis to identify critical price levels worth watching out for after the index’s record close.

Ascending Broadening Formation in Focus

The S&P 500 has traded within an ascending broadening formation since late May, recently finding support near the pattern’s lower trendline and 50-day moving average (MA).

Meanwhile, the relative strength index confirms bullish momentum and sits well below previous peaks, indicating room for further upside. However, the large-cap benchmark closed just below the upper Bollinger Band on Friday, suggesting that near-term gains may be limited before a potential pullback or consolidation.

Let’s identify a critical overhead area to watch if the S&P 500 continues to trend higher and also point out three major support levels worth monitoring during possible downturns.

Story Continues

Critical Overhead Area to Watch

An expansionary move above the upper Bollinger Band could see the S&P 500 rally toward 7,075, about 4% above Friday’s close.

Investors who trade the index may look for exit points in this area near the ascending broadening formation’s upper trendline, which continues to rise, creating a dynamic resistance level that moves higher over time.

Major Support Levels Worth Monitoring

The first support level to monitor sits around 6,600. This location on the chart provides a confluence of support from the ascending broadening formation’s lower trendline and the upward-sloping 50-day MA.

A breakdown from the ascending broadening formation could see the index initially fall toward the 6,500 level. Support may emerge in this area, just below the October low and near the upper range of a sideways trend that formed on the chart between mid August and early September.

Finally, further downside could see the S&P 500 retrace toward 6,360. The index may find support in this region near a trendline that connects a series of corresponding trading activity on the chart from late July to early September.

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As of the date this article was written, the author does not own any of the above securities.

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