The S&P 500 has been performing strongly in 2021, and many investors are wondering what the future holds. However, it can be difficult to predict just how long the current bull market will last. In order to help investors make more informed decisions, here are three charts you need to watch closely for a potential turnaround in the S&P 500.
The first chart that investors should be watching is the Relative Strength Index (RSI). This index measures the rate of change in the price of a security over time, and it can act as a leading indicator of a potential market reversal. A reading above 70 is considered overbought, while a reading below 30 is considered oversold. If the RSI breaks out of these two thresholds, it can be a sign of a potential market reversal.
The second chart investors should be keeping an eye on is the 200-day moving average. This indicator tracks the average price of a security over a 200 day period, and it can help investors identify potential support or resistance levels for the S&P 500. If the index falls below this level, it could be a sign that the market is due for a reversal.
Finally, investors should also watch the VIX index, which measures market volatility. If the VIX index is trending upward, it could indicate that investors are becoming anxious about the current state of the market and are beginning to sell off their positions. A rising VIX index is often seen as a potential signal of an impending market reversal.
Trading in the stock market can be a risky endeavor, and it’s important to pay close attention to market trends. Knowing which charts to watch can help investors anticipate a potential turnaround in the S&P 500. Watching the RSI, the 200-day moving average, and the VIX index are three important charts that investors should keep a close eye on for clues about the future of the market.
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