S&P 500 Price Analysis: The S&P 500 crashes 2.5% and drops below 3,500

S&P 500 30-minute chart

The US indices have sold off heavily on Thursday and they have also managed to drag down the Dax that was positive for most of the EU session. Some analysts have noted profit-taking as the main cause but ahead of tomorrow's US non-farm payroll data but there has been some soft data today as initial jobless claims missed expectations.

NVIDIA, Apple, AMD and Adobe are all trading over 5% lower in the S&P 500 index. Doubts about the US government agreeing on fiscal stimulus measures are also in investors minds after Senate Majority Leader Mitch McConnell raised concerns if Congress can get a deal at all. He stated, “I don’t know if there will be another package in the next few weeks or not,” and then went on to say that talks between top administration officials and House Speaker Nancy Pelosi haven’t been fruitful.

Looking at the chart, the price has bounce off the black support level at 3,451.77 and now all eyes will be on the red resistance zone at 3,500. If the price can break the 3,500 level by the time the market closes maybe it will give the bulls some hope. On the downside, if the aforementioned support level is broken may be the sell-off might continue leading into the NFP data on Friday.

The Relative Strength Index indicator has moved into the oversold zone. This does not necessarily mean the price will bounce make but the market might take a small breather before continuing lower. The MACD confirms the bearishness as the histogram is firmly in the red and the signal lines have crossed to the downside. 

Longer-term the trend is still very much up. This could just be a small blip in an otherwise strong uptrend. For now, traders and investors will need to watch for further signs that the retracement could turn into a full-blown trend change.

Additional levels