S&P 500 Weekly Momentum Stretches as Daily Signals Turn Cautious
After months of persistent gains, the S&P 500 appears to be approaching a potential inflection point. The benchmark index has climbed steadily throughout the second half of 2025, supported by easing inflation trends, resilient corporate earnings, and optimism surrounding the Federal Reserve’s policy stance. Yet, recent technical indicators suggest that market momentum could be losing steam, warranting a more measured outlook in the near term.
From a weekly perspective, the S&P 500 remains firmly in an uptrend. The index recently touched new highs near the 6,750 level, extending a rally that began in March 2025. However, oscillators are showing signs of exhaustion. The Stochastic RSI has been overbought for several weeks, while the MACD line remains elevated, historically a sign that bullish momentum may be overstretched. While no clear reversal has emerged, traders are increasingly cautious that the rally’s pace may be unsustainable without fresh catalysts.
Weekly Chart Overview: A Mature Bull Run
The weekly chart highlights the strength of the longer-term rally. Each pullback since mid-2024 has been met with solid buying support, reflecting strong institutional participation. The index’s structure continues to show higher highs and higher lows, a textbook definition of an uptrend. However, price action is now consolidating near record levels, with smaller weekly candles indicating hesitation among buyers.
The MACD (Moving Average Convergence Divergence) remains positive, signaling that the trend is still intact. Yet, the indicator’s histogram has flattened, suggesting that upward momentum is no longer accelerating. Similarly, the Stochastic RSI has been pinned above the 90 level for an extended period, an overbought condition that often precedes sideways movement or mild corrections. This combination of stretched momentum and subdued volume raises the risk of a near-term breather rather than a sustained breakout.
The overall takeaway from the weekly timeframe is that the market remains bullish, but increasingly mature. It may require a new macro or earnings-driven catalyst to push higher, while the absence of such triggers could lead to short-term consolidation. For medium-term investors, this means staying invested but managing expectations for near-term upside.
Daily Chart: Early Signs of Momentum Fatigue
Zooming into the daily timeframe, the S&P 500’s structure remains constructive but shows early hints of exhaustion. Prices continue to respect the upward channel formed since July, yet recent candles indicate fading momentum near resistance. The index closed at 6,747, only modestly higher on the session, with several intraday attempts to break above 6,760 rejected.
The MACD on the daily chart is still in positive territory, but the histogram has started printing red bars for the first time in several weeks. This subtle shift signals that the bullish momentum driving the rally may be losing intensity. If this trend continues, a bearish crossover could form in the coming sessions, especially if broader sentiment turns risk-off.
Meanwhile, the Stochastic RSI sits around 55–57, a neutral zone. After being overbought for much of September, the indicator’s current position implies that momentum has cooled, neither supporting a strong rally nor a decisive pullback. This kind of reading typically precedes a consolidation phase where the market trades sideways before committing to a new direction.
The technical picture aligns with recent fundamental crosscurrents. Although economic data remains mixed, rising inflation expectations and uncertainty about future Fed policy have tempered investor enthusiasm. As a result, buying conviction appears weaker at current price levels, despite the lack of strong selling pressure.
Market Structure and Key Levels
From a price action standpoint, the S&P 500 faces immediate resistance around 6,760–6,780. This zone represents the upper boundary of its recent range and could act as a psychological barrier unless reinforced by higher trading volume. On the downside, the first key support lies near 6,700, followed by 6,630, which aligns with the late-September consolidation area.
A decisive close below 6,700 could signal a short-term shift in sentiment, potentially inviting profit-taking or light technical correction. However, as long as prices remain above 6,630, the broader trend remains intact. A breakout above 6,780, on the other hand, would confirm renewed bullish strength and open the door toward 6,850–6,900 in the medium term.
Volume patterns add nuance to this picture. Over the past two weeks, daily trading volume has declined slightly, a sign that the rally’s breadth is narrowing. Historically, late-stage rallies often experience this kind of divergence between price and volume—suggesting strong prices but weak participation. For that reason, traders are watching closely for either a pickup in volume confirming bullish continuation or a pullback that resets short-term momentum.
Macro Context: Balancing Growth and Inflation
The technical outlook cannot be separated from the broader macro environment. The latest U.S. Consumer Inflation Expectations for September rose to 3.4%, up from 3.2% in August and higher than the consensus estimate of 3.1%. This data suggests that inflation pressures remain sticky despite the Fed’s efforts to cool the economy. In response, market participants are recalibrating expectations for future policy easing, with fewer now anticipating aggressive rate cuts in early 2026.
This shift in inflation expectations has had a subtle but meaningful impact on equity sentiment. Growth sectors such as technology, typically sensitive to changes in real yields, have shown signs of fatigue, while defensive and value-oriented sectors are beginning to attract relative interest. The rotation hints that investors are hedging against potential macro volatility while still maintaining exposure to the broader bull trend.
In essence, the market appears to be entering a “wait-and-see” phase. The Fed’s next policy communication will be critical in determining whether recent inflation data represents a temporary uptick or a reacceleration that could force a more hawkish stance. Until then, equities may struggle to find fresh directional conviction.
Investor Implications
For traders, the current setup calls for patience and selectivity. The trend remains bullish, but the risk-reward ratio for new long positions has diminished. Short-term participants may prefer to wait for either a breakout confirmation above 6,780 or a correction back to the 6,630–6,650 area before adding exposure. Conversely, for those already positioned, partial profit-taking near resistance could help preserve gains while retaining core holdings.
Longer-term investors should focus on the underlying strength of corporate earnings and macro fundamentals, rather than short-term momentum shifts. As long as economic growth remains steady and earnings revisions trend upward, the broader equity uptrend remains defensible, even if short-term volatility increases.
For now, the technical setup suggests consolidation rather than collapse. Momentum is slowing, but not reversing. The next major move will likely depend on how inflation and policy expectations evolve over the next month.
A Market at a Crossroads
The S&P 500’s recent behavior embodies the balance between optimism and caution that defines the late stages of a bull run. Weekly momentum indicators warn of exhaustion, while daily signals hint at cooling sentiment. Neither the bulls nor the bears have taken control, leaving the index in a state of equilibrium, poised between continuation and correction.
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