JPMorgan highlighted in an investor note that the S&P 500 (SP500) threatens key technical support levels as momentum has taken the benchmark index lower over the past week and a half. Since topping out at 4607 on July 27th, the S&P 500 has since declined roughly 2.5% to 4470.
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The financial institution went on to say that a short-term reversal pattern is starting to take shape that’s threatening key support levels as the S&P 500 sees its weakest momentum trend since early May.
“A move through 4404-4421 would completely derail the bullish trend dynamics associated with the Mar-Aug rally and put the market on course for a test of 4302 and the key 4200 chart inflection.”
Moreover, JPMorgan went on to add: “We think that area eventually gives way as the index completes the interrupted bear market.”
See below a chart of the S&P 500 along with the technical 4302 and 4200 levels marked.
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Also flagging the 4300 and 4200 levels was BTIG, as the financial institution said earlier this week: “More meaningful support comes in at 4200-4300.”
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Moreover, any move lower in the S&P 500 will also have direct effects towards Wall Street’s three largest exchange traded funds which together manage just over $1T worth of investor capital. The three funds are the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), iShares Core S&P 500 ETF (NYSEARCA:IVV), and the Vanguard S&P 500 ETF (NYSEARCA:VOO). For reference, SPY manages $416.14B in assets under management, while IVV and VOO oversee $384.57B and $333.03B.
