The S&P 500 continues to hold a strong long-term upward trajectory despite recent signs of caution among global investors, with technical indicators suggesting that the broader US equity market remains positioned for further gains.
In a technical market assessment released on Monday, First National Bank (FNB) said the index remains within a clearly established ascending channel and is trading comfortably above its key 200-day and 200-week simple moving averages — indicators often used by investors to measure long-term market direction.
“The outlook remains broadly positive, with our AI-generated forecast model pointing to continued strength over the medium term,” FNB stated in its analysis.
The bank noted that investors are currently navigating a mix of economic uncertainties, including geopolitical tensions, persistent inflation concerns and changing expectations around central bank policy. However, it said these factors have not yet altered the broader market structure, describing current conditions as neutral rather than bearish.
7,620 level emerges as critical market test
According to FNB’s technical analysts, the S&P 500 is approaching a major decision point around the 7,620 level, which could determine the market’s next significant move.
“A decisive break above 7,620 would confirm the continuation of the current Elliott Wave 5 advance,” the bank said.
FNB added that a successful move beyond this resistance zone could strengthen bullish momentum and push the index towards the upper boundary of its existing price channel near 8,280.
The Elliott Wave 5 advance referenced by the bank represents the final upward phase of a broader market cycle under the technical analysis framework, typically associated with continued momentum before a potential trend reversal or extended consolidation.
Potential correction remains possible
While maintaining a positive outlook, FNB warned that failure to overcome the 7,620 resistance level could lead to a temporary slowdown in market momentum.
The bank said a rejection at that level could result in a period of consolidation or a moderate pullback, with initial technical support expected around 7,020.
If selling pressure increases, stronger support could emerge near the 6,560 region, where buyers may attempt to stabilise the market.
Despite these risks, FNB stressed that the current market behaviour does not resemble the early stages of a prolonged decline.
“The current move is more consistent with a pause within an ongoing bull market rather than the beginning of a sustained downturn,” the bank concluded.
The firm advised investors to closely monitor the 7,620 threshold, which it identified as the key signal for whether the S&P 500 is ready for its next major upward move or requires further consolidation.