Oct 23 (Reuters) - The S&P 500 (.SPX), is trading near record highs, but it has made surprisingly little upward progress over the last few months and has tough work ahead to reach new heights, technical analysis suggests.
Technical analysis uses charts of past price moves to map out where a market might go next. Analysts look for points on the chart that could act as support, which is a floor for prices during a slide. They also look for resistance, which is a ceiling that can cap gains.
Moving averages are particularly reliable guides to support and resistance. They smooth out price swings by averaging prices over a set period, such as 50, 100 or 200 days.
Because moving averages continuously update, they can move up or down. Previous highs and lows also serve as markers. So do big round numbers, which analysts call psychological levels because traders tend to focus on them. Another tool is called a Fibonacci retracement -- a mathematical calculation that marks the percentages a market often pulls back to after a big move.
The S&P 500 closed down more than 1% on Thursday at 7,663.43, led by technology shares, according to LSEG data.
If the index keeps sliding, chart watchers will want to see whether it can hold above the October 16 low at 7,631.77 and the October 1 low at 7,616.78. Beneath those levels is the rising 100-day moving average, now near 7,604. The index has not closed below that average since April 7, which adds to its significance.
A close below the 100-day moving average would shift attention to the September 16 low at 7,507.77 and the 23.6% Fibonacci retracement of the March-to-October advance at 7,484.00.
Below that is the June-to-July trough at roughly 7,237 to 7,313. A trough is the low point on the chart. That zone also contains the rising 200-day moving average near 7,288, an average that long-term investors watch closely. A retreat to this area would leave the index roughly 6.5% to 7.4% below its record closing high.
On the upside, the 50-day moving average sits near 7,703. A move above the October 21 high at 7,770.40 would put the record highs back in play. A breakout above the October 6 intraday record of 7,844.52 could open the door to a test of the 8,000 psychological level.
An intraday record is the highest price reached during a trading session, whatever the closing price.
For now, the index is hemmed in between a thick band of support below it and a series of recent highs overhead. A decisive move through either side would likely set the tone for the next period.
What the chart shows:
The S&P 500 is near record highs but has made little progress in recent months
A close below the 100-day moving average near 7,604 could target 7,507.77, 7,484.00 and the 7,237 to 7,313 zone
A move above 7,770.40 would put record highs back in play, and a break above 7,844.52 could lead to 8,000
(Mapping the Market is a daily column written by Reuters journalists. The commentary is based on a technical analysis of financial charts, which helps assess the likelihood of future price moves but does not guarantee the outcome. The column does not constitute investment advice or trading recommendations. )
Terence Gabriel is a Reuters market analyst. The views expressed are his own. Editing by Burton Frierson and David Gaffen
