SPX 500: Three-day sell-off reached 20-day moving average, a tipping point for a bullish reversal

[Redator]

Key takeaways

• SPX 500 pullback: Index fell -1.9% over three sessions from its all-time high, testing key support at 6,580/6,560 near its 20-day moving average.
• Bullish setup intact: price remains within its short- and medium-term uptrend, with momentum indicators pointing to easing bearish pressure.
• Sector rotation support: Consumer Discretionary’s outperformance over Consumer Staples signals potential for a bullish reversal in SPX 500.
• Key levels to watch: a rebound above 6,635 could extend gains to 6,670/6,680 and 6,730/6,745; failure below 6,560 risks a deeper slide to 6,530/6,460.

Since hitting the latest fresh all-time high of 6,710 on Monday, 22 September 2025, the US SPX 500 CFD Index (a proxy of the S&P 500 E-mini futures) has dropped for three consecutive sessions and shed -1.9% (high to low) to print an intraday low of 6,580 on Thursday, 25 September 2025.

The recent corrective pullback in the US SPX 500 CFD Index has been attributed to overvaluation concerns in mega-cap technology stocks and a potentially less dovish Fed, where a stronger US Q2 GDP growth reduced the odds of a December Fed rate cut to 58% from 79% a week ago.

Let’s now focus on the latest short-term trajectory (1 to 3 days), relevant key elements, and key levels to watch for the US SPX 500 CFD Index from a technical analysis perspective ahead of today’s key US PCE data (inflation, personal income, and spending) releases.

Fig. 1: US SPX 500 CFD Index minor trend as of 26 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

The three-day sell-off of 1.9% seen in the US SPX 500 Index has not damaged its short-term (minor) and medium-term uptrend phases.

Maintain a bullish bias for a potential near-term recovery above 6,580/6,560 key short-term pivotal support. A clearance above 6,635 is likely to increase the odds of a bullish reversal towards the next intermediate resistances at 6,670/6,680 before the next resistance at 6,730/6,745 (Fibonacci extension cluster).

Key elements

• The current price actions of the US SPX 500 CFD Index are still oscillating above its 20-day, 50-day moving averages and within a medium-term ascending channel in place since 22 May 2025 low.
• The 6,580/6,560 key short-term pivotal support of the US SPX 500 CFD Index confluences closely with the rising 20-day moving average.
• The hourly RSI momentum indicator of the US SPX 500 CFD Index has shaped a bullish breakout above its former descending trendline resistance, which suggests that the recent bearish momentum has eased.
• The relative chart of the cyclical-oriented equal-weighted S&P 500 Consumer Discretionary sector ETF versus the defensive-oriented equal-weighted S&P 500 Consumer Staples sector ETF has rebounded after retesting its 20-day moving average. This development signals continued outperformance in Consumer Discretionary over Consumer Staples, reinforcing the case for a potential bullish reversal in the US SPX 500 CFD Index.

Alternative trend bias (1 to 3 days)

Failure to hold at the 6,580/6,560 key short-term support on the US SPX 500 CFD Index invalidates the bullish reversal scenario for a deeper minor corrective decline sequence to expose the next support at 6,530 (also the lower boundary of the medium-term ascending channel).

A break below 6,530 may trigger a deeper slide towards 6,460 (also the rising 50-day moving average) next.

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