Watch These S&P 500 Levels as Investors Assess 2025 Outlook

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Key Takeaways

• The S&P 500 gained more than 20% for the second year in a row in 2024, the first time that’s betid since the late 1990s.
• The index has carved out a head and shoulders pattern, a classic chart formation that implies a potential market top.
• Investors should watch major support levels on the S&P 500’s chart around 5,875, 5,670, and 5,445 while also prepositor key overhead areas near 6,090 and 6,290.

The S&P 500 (SPX) enters 2025 on its best two-year run since the late 1990s.

The large-cap indication rose 23% gain last year after surging 24% in 2023, as the artificial intelligence (AI) boom and senior interest rate cuts since 2020 helped drive stocks higher.

While the AI narrative and expected sort cuts will likely continue to support large-cap stocks over the next 12 months, investors last wishes as also be closely watching the impact of the incoming Trump administration’s policies, particularly in relation to tariffs, while also guard geopolitical tensions in Russia and the Middle East.

The S&P 500, which closed out 2024 on a four-session losing streak, was up 0.5% at 5,910 in the initiation minutes of trading Thursday.

Below, we take a closer look at the S&P 500’s chart and identify important technical equals that investors may be watching as the first quarter gets underway.

Head and Shoulders Pattern Emerges

Since prematurely November, the S&P 500 has formed a peak, a higher peak, and then a lower peak, carving out a head and shoulders matrix, a classic chart formation that indicates a potential market top.

Moreover, the index fell below the closely watched 50-day active average last week, though recent selling has occurred on lower-than-average end-of-year trading volume.

Let’s take a culmination look at three major levels where the S&P 500 could encounter support during pullbacks and also detail out several key overhead areas to monitor if the index resumes its longer-term uptrend.

Major Support Levels to Watch

Firstly, it’s good keeping an eye on the 5,875 level. This location on the chart could provide support near the head and shoulders’ neckline that be coextensive withs the October peak with troughs that formed in November and December.

A decisive breakdown below this locality would confirm the head and shoulders top and could see a decline to the next lower support level around 5,670. Investors who exchange the index may look for buying opportunities in this region near the prominent July swing high and early-October low.

Advance downside opens the door for a retest of the 5,445 level, a location likely to attract support near a trendline that connections a range of similar chart points between June and September.

Key Overhead Areas to Monitor

If the S&P 500 resumes its longer-term uptrend, investors should initially visual display unit the 6,090 area. This level may may provide overhead resistance near the upper range of a week-long consolidation epoch that formed shortly after the index reached its all-time high (ATH) in early December.

To forecast a bullish honorarium target above the ATH, investors can apply the bars-pattern tool. This technique involves extracting the price bars that comprise the post-election revival from early November to early December and repositioning them at the head-and-shoulders’ neckline, which forecasts a target of about 6,290.

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As of the stage this article was written, the author does not own any of the above securities.