The bottom formed in April 2025 at $36,500 has produced strong support around $35,000 to $38,000. The index is now consolidating around the 50,000 level and looks for next move.
The strong support remains at 45,000 as the US-Iran tensions escalate. A break below 45,000 will take the index toward $38,000. However, a recovery above 50,000 will indicate further upside toward $55,000. It is interesting to note that the index has also reached the RSI around 70, which suggests a correction may develop.
S&P 500 Faces Dual Risk from Rising Oil and Slowing Growth
S&P 500 reflects the broader market, and its reaction reflects both macro and sector-specific fears. The index was already showing weakness in February due to concerns that AI would disrupt traditional business models. The geopolitical escalation adds an additional layer of uncertainty on top of those structural worries.
Investors face two simultaneous risks. The first is the increased inflation due to rising oil prices. The second risk is a possible economic slowdown due to a weakening of business confidence. When these risk factors converge, portfolio managers tend to reduce their positions in cyclicals and shift to defensive areas, which results in broader index weakness.
The weekly chart for the S&P 500 shows strong consolidation at a higher level below 7,000. The overall price structure for the S&P 500 remains strongly bullish, as seen in the bullish pattern formation in 2022 and then the broadening wedge pattern from 2024 to 2026.