The future performance of the S&P 500 index remains a crucial area of market attention, with some analysts warning that investors should brace for a possible crash.
Certain market participants have suggested that the index may experience further gains before a potential downturn, aligning with projections of an upcoming recession.
In a recent analysis, stock market expert Alan Santana indicated in a TradingView post on August 22 that a significant downturn in the S&P 500 appears imminent. He warned that the market could be on the brink of the most dramatic crash since 2022, with the recent upward movement being merely a temporary pullback in a broader bearish trend.
“We are likely witnessing the very beginning, the start of the most dramatic crash since the year 2022.<…> Based on market cycle, price dynamics and TA experience. The SPX is about to resume its corrective phase,” the expert noted.
Based on technical analysis and market cycle observations, Santana’s assessment suggested that the index is poised to resume its downward trajectory after a brief three-week rally. He argued that this rally does not indicate an actual bullish reversal but a correction within an ongoing bearish framework.
Notably, the analysis highlighted the formation of a lower high, often a precursor to a lower low. This pattern indicates that the recent bounce is merely a pause in a larger downtrend.
SPX key levels to watch
Additionally, with the S&P 500 currently hovering near the 0.236 Fibonacci retracement level, Santana predicted a potential decline towards the 0.618 retracement level, around the 4,320 mark.
Furthermore, the S&P 500 is moving within a well-defined bearish channel, and the recent pullback has failed to break out of this pattern, reinforcing the likelihood of a continued downtrend.
Overall, the analysis implies that investors should prepare for a steep and swift market correction. The recent highs could mark the end of the current market cycle’s bullish phase, with a sharp decline expected in the coming weeks.
However, despite the dire outlook, Santana emphasizes that there is still time for investors to prepare.
Notably, as reported by Finbold, economist Henrik Zeberg suggested that the index could reach an all-time high above 6,000 points before crashing. He anticipates that market participants should expect the worst recession since the Great Depression of 1929.
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Source: https://finbold.com/strong-crash-looms-for-sp-500-and-were-at-the-very-beginning/