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Concerns for the S&P 500 Amid Stock Market Decline

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Andrew R. Michaud

• October 03, 2023

The recent downturn in the stock market has had a significant impact on the Dow Jones Industrial Average, which is now in negative territory for the year. Investors are growing increasingly concerned about the S&P 500, and all eyes are on a critical level of support.

Technical Analysts Alerted to Support Level

Mark Arbeter, president of Arbeter Investments LLC and a renowned technical analyst, recently highlighted the importance of the 4,200 level for the S&P 500. In his note, Arbeter emphasized that the index is rapidly approaching this crucial support level.

Market Update

As of early Tuesday afternoon, the S&P 500 was down 1.2%, hovering around 4,237. Meanwhile, the Dow Jones Industrial Average experienced a significant drop of almost 350 points (1%), wiping out its gains for 2023. Despite the recent decline, the S&P 500 has still managed to maintain a year-to-date increase of over 10%, mainly thanks to the strong performance of large-cap technology stocks.

The Significance of 4,200

Arbeter points out that the 4,200 level holds substantial significance due to several factors. Firstly, it aligns with the 200-day moving average for the index. Additionally, it represents both a 38.2% Fibonacci retracement from the stock market rally that began in October 2022 and a 50% retracement from the rally since the March low.

Expectations of a Rebound

Given these key details, Arbeter predicts that the market will likely experience at least a bounce from this critical support region. Investors will closely monitor the index's performance as it approaches the 4,200 level.