S&P 500 Analysis: Price Reaches The Edge of Abyss

<img src="https://fxopen.com/blog/en/content/images/2023/09/sp500-5.jpg" alt="S&amp;P 500 Analysis: Price Reaches The Edge of Abyss" /><p>Investors in the US stock market have serious reasons to worry:</p><p>→ The likelihood of a shutdown of government agencies is becoming more and more real. It could happen as early as next week if a budget agreement is not reached (A new fiscal year begins on October 1 in the United States).<br>→ The prospect of a high policy rate that could last longer than expected is weighing heavily, causing the S&amp;P 500 to decline markedly since last Wednesday&apos;s Fed meeting.<br>→ According to MarketWatch, the so-called “fear index” (using several input data, including the Cboe VIX volatility index) reached the “extreme fear” level for the first time since March 15, when a series of US bank failures occurred.</p><figure><img src="https://fxopen.com/blog/en/content/images/2023/09/283.png" alt="S&amp;P 500 Analysis: Price Reaches The Edge of Abyss" loading="lazy" width="2000" height="1099" srcset="https://fxopen.com/blog/en/content/images/size/w600/2023/09/283.png 600w, https://fxopen.com/blog/en/content/images/size/w1000/2023/09/283.png 1000w, https://fxopen.com/blog/en/content/images/size/w1600/2023/09/283.png 1600w, https://fxopen.com/blog/en/content/images/size/w2400/2023/09/283.png 2400w" sizes="(min-width: 720px) 720px" /></figure><p>A threatening picture can be observed on the weekly chart of the S&amp;P 500, constructed with a logarithmic price scale. Price dynamics form an important long-term channel that takes into account the beginning (1) and the bottom (2) of the coronavirus panic; historical maximum (3); bottom 2022 (4); the current maximum of 2023 (5), as well as a series of intermediate extremes. Note that the price has approached the lower border of the channel.</p><p>On the one hand, this can be regarded as a bullish argument — it is possible that the price will find support from the lower border (as was the case, for example, in March).</p><p>On the other hand, what if negative scenarios come true with a government shutdown, a further increase in inflation due to high prices, and a fall in the labour market? Epithets with “falling into the abyss” suggest themselves.</p><p>Today at 15:30 GMT+3, US GDP data and news from the labor market will be published. Be prepared for spikes in volatility.</p>