S&P 500 holds on to bullish momentum amid increasing volatility

AS AT Jun 18, the S&P 500 continued to trade within a strong bullish trend, extending the recovery that began after the market bottomed in April 2026. The sharp reversal from the January to April decline has been supported by improving investor sentiment, resilient corporate earnings, and continued leadership from technology-related sectors. Despite the bouts of volatility throughout June, the index remains close to record highs, reflecting investors’ confidence in the broader economic conditions.

The recovery is particularly impressive given the number of macroeconomic events influencing markets, such as heightened geopolitical tensions arising from the US-Iran conflict, the first Federal Reserve meeting under new chairman Kevin Warsh, as well as the release of key inflation and employment data. At the same time, strong price performances of major technology companies have helped offset concerns over interest rates and inflation, allowing the index to continue pushing higher.

From a technical perspective, the S&P 500 reached a fresh all-time high of about 7,621 in early June, establishing the first significant resistance level for the market. Following a strong rally over the past two months, the index has entered a period of consolidation just below this peak as investors assess whether sufficient catalysts exist to drive the next leg higher.

Unlike previous rallies where historical resistance levels might act as technical reference points, the S&P 500 is once again approaching largely uncharted territory. Should the index successfully break above 7,621, the next major upside target would likely be the 8,000 psychological level.

Despite the positive trend, the recent increase in volatility highlights the potential risks of correction. The first significant support zone is located around 7,314, which coincides with both the 23.6 per cent Fibonacci retracement level of the advance between April 2026 to June 2026 and the 50-day Simple Moving Average (SMA). The convergence of these two technical indicators strengthens the significance of this area, suggesting that buyers may look to defend the level during any short-term pullback.

Should selling pressure intensify, the next support level emerges near 7,200, which served as an area of consolidation during the recent advance. A deeper correction could then bring the index back towards the 7,000 level, a major psychological threshold that previously acted as resistance on multiple occasions before the breakout.

The broader trend remains constructive. Since the April reversal, the S&P 500 has continued to form a series of higher highs and higher lows, while remaining comfortably above its major moving averages. This price structure suggests that buyers remain in control despite periodic bouts of volatility. Furthermore, the upward slope of the 50-day SMA continues to reinforce the bullish outlook and reflects the strength of the medium-term trend.

Nevertheless, investors should remain mindful that after such a strong recovery from the April lows, periods of consolidation or retracement would be considered normal and could help establish a healthier foundation for future gains.

In summary, the S&P 500 remains firmly in an uptrend after reversing the January-to-April decline and reaching a new high near 7,621. While near-term volatility may persist due to geopolitical and macroeconomic developments, the technical structure remains favourable as long as the index holds above the key support zone around 7,314. A successful breakout above 7,621 could pave the way towards the next major milestone at 8,000, while support at 7,200 and 7,000 provides important levels to monitor should the market undergo a corrective phase.

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The writer is manager of dealing and investor education at Phillip Securities