S&P 500 Index Performance at Close:

The S&P 500 index experienced a noticeable decline on Wednesday, ending a nine-session winning streak, pressured by escalating tensions in the Middle East and a significant drop in the technology and financial services sectors.

• Closing Price: 7,553.68 points.

• Daily Change: -56.10 points (-0.74%).

• Session High: 7,605.35 points.

• Session Low: 7,551.22 points.

Technical Analysis and Current Status of the Index

The index is moving in a strong long-term upward trend and successfully broke through the upper ceiling of the previous horizontal channel during trading in May and early June. The current pullback is classified technically as a normal corrective movement and a test of the breached channel peak to confirm its transformation into strong support.

Upcoming Support and Resistance Levels

• First Resistance: 7,627 points (the historical peak recorded on June 2; breaking it opens the way towards the next psychological target at 7,700 points)
• Second Resistance: 7,650 points

• First Support: 7,430 points (a near support level, maintaining it keeps momentum active in the short term)
• Second Support: 7,300 points 

The index is in a stable upward trend, and the decline on Wednesday is a correction resulting from overbought conditions and rising geopolitical risks (oil and geopolitical tensions). The index is expected to seek a new higher low above the support levels of 7,412 or 7,300 points before attempting to resume the uptrend and test the historical peak again.

Expected Scenarios for the Coming Period

Scenario One: Healthy Correction and Resumption of Uptrend:

The index gradually retraces to re-test the nearby support levels between 7,412 points and 7,300 points (the peak of the previously breached channel), from there new buying liquidity flows in to build a new higher low.

Targeting the breach of the historical peak 7,610 points  and then heading towards the next psychological target at 7,700 points.

Scenario Two: Horizontal Movement and Fluctuation:

The index enters a phase of horizontal and dull fluctuation between defined support and resistance levels due to a balance of power between buyers and sellers and market hesitation.

The index will be confined to a broad horizontal range with a lower limit of 7,300 points and an upper limit of 7,600 points.

Important Guidelines and Strategy for Traders

Do not rush to buy with full liquidity at the first drop; monitor the behavior of the index and leading stocks at the support levels of 7,412 points and then 7,300 points.

If you have open long positions from the previous uptrend, raise your stop-loss order to protect your realized profits, and consider a daily close below 7,300 points as a signal to reduce positions.

It is advisable to keep a portion of the portfolio (between 20% to 30%) as cash liquidity, which will serve as an opportunity to seize potential buys.

Conclusion

Do not chase prices at the peak and set trailing stop-loss orders to protect your profits. Wait for temporary pullbacks to safely open new buy positions.

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