Warning: S&P 500 flashes start of bear cycle

The S&P 500 slipped below its 50-day moving average and closed beneath that level, trading around 6,630.21 (-0.6% on the day), and technical readings on daily and weekly charts suggest the short-term pullback could widen, according to TradingShot. Analysts flag a bearish weekly RSI divergence—price printing higher highs while RSI trends lower—mirroring late‑2021 conditions that preceded the 2022 bear market, and note the 100-day MA has been primary support; a weekly close below that trend line would be a structural breakdown with technical projections pointing toward a retracement to the 200‑week MA and a potential accumulation zone near 5,300–5,000 (roughly a 27.6% drawdown from the prior peak). The report also notes growing bearish sentiment in crypto even as some Wall Street voices remain bullish on the S&P, targeting 7,000 next year.

Analysis

The S&P 500 slipped below its 50-day moving average and closed beneath that level, trading at 6,630.21 as of press time, a 0.6% decline on the day, and TradingShot flagged weakening short-term momentum on both daily and weekly charts in a November 18 note. Technical indicators now show a persistent bearish divergence on the weekly RSI—lower RSI highs since late October despite higher price highs—which the analyst likens to the setup in mid‑November 2021 that preceded the 2022 inflation-driven bear market.

The 100-day moving average has been the market’s primary support for the past five months and across major up-legs; a weekly close below that trend line would be a structural breakdown and, per the technical projection, could push prices toward the 200-week moving average. The report estimates a next major accumulation zone around 5,300–5,000, implying a potential retracement on the order of roughly 27.6% from the prior peak if the current peak holds, while noting that a new high before rollover would shift those downside targets proportionally.

Market sentiment readings accompanying the piece are moderately negative (sentiment score -0.45) with bearish spillover into crypto, yet some Wall Street analysts remain bullish and cite a 7,000 S&P target for next year; this divergence underscores that risk is conditional and timing-sensitive. The technical setup increases the probability of a deeper correction absent a clear bullish resolution, so near-term positioning should prioritize risk controls and monitoring of the 100-day MA and weekly RSI for confirmation of a structural shift.

Key Decisions for Investors

• Monitor the S&P 500 weekly close relative to the 100-day MA and the weekly RSI divergence closely; treat a confirmed weekly close below the 100-day MA as a trigger to tighten risk exposures
• Consider reducing directional equity beta or implementing protective hedges (e.g., protective puts or short futures) sized to portfolio tolerance if the index breaches the 100-day MA on a weekly basis
• Avoid adding material long exposure until either the RSI divergence resolves with improving momentum or price approaches the cited accumulation zone near 5,300–5,000 and shows signs of stabilization
• Trim or hedge crypto and other high-beta positions given the noted spread of bearish sentiment into digital assets, while monitoring for a clearly defined risk-reward setup before redeploying capital
• If conviction remains bullish, limit new long positions to staggered entries and use defined stop-losses tied to the structural support levels discussed to manage downside risk