According to Bespoke Investment Group, even though U.S. stocks are up this year, the S&P 500 has fallen to the bottom of its bullish trading channel. The index has slumped this month and was trading down 0.3% on Tuesday at around 4,441 as investors await the outcome of the Federal Reserve’s two-day policy meeting concluding on Wednesday.
In a note on Tuesday, Bespoke mentioned that the S&P 500 is currently at the bottom of its uptrend channel and below its 50-day moving average. They also provided a chart that tracks the index’s trading channel.
BofA Global Research stated on Tuesday that historically, the S&P 500 has entered its weakest 10-day period of the year during the last 10 days of September, and this period began on September 18.
Despite falling 1.5% this month, the S&P 500 still had gains of over 15% year-to-date as of Tuesday afternoon. However, the index was trading below its 50-day moving average of almost 4,484. It is on track for back-to-back monthly losses after a strong performance from January through July.
Bespoke noted that they have observed more stocks across various sectors breaking down or failing at key resistance levels. This trend is particularly noticeable in consumer staples and healthcare sectors. On the other hand, energy and financials, specifically insurance stocks, have shown the most strength.
While the S&P 500 has fallen this month, the energy sector of the benchmark has seen a gain of over 3%, driven by higher oil prices. These higher oil prices have contributed to inflation, with the consumer-price index rising 0.6% in August, resulting in a year-over-year rate of 3.7%, up from 3.2% in the year through July.
Federal Reserve Chair Jerome Powell is scheduled to hold a press conference on Wednesday after the central bank’s policy meeting concludes. Investors will be watching for any clues regarding the duration of elevated interest rates as the Fed aims to bring inflation down to its 2% target.