Technical analysts who watch price charts worry that after Monday’s shellacking the S & P 500 could soon test its 200-day moving average, saying the latest action confirmed how fragile the market setup is at the start of a new month. The S & P 500 briefly traded 0.53% higher early Monday morning before selling took hold a half an hour after the open and drove the benchmark index down by 2.41% at the afternoon low. That followed what was already a weak February for equities amid waning momentum in the Magnificent Seven stocks, heightened fears around tariffs on Canada, Mexico and China and suddenly weaker economic data. The broad market index ended February lower by 1.4%, and then fell by more than that on Monday alone. But market technicians say there could well be more downside ahead, expecting the S & P 500 could soon test investor support at its 200-day moving average (DMA) — a measure using the average closing price of a security over the past 200 days to identify longer-term trends. “Our conviction remains high that SPX tests its 200 DMA in the coming weeks,” BTIG’s Jonathan Krinsky wrote on Sunday. “The path to get there is less certain,” he added, but advised that that any S & P 500 rallies back to the area around 6000 are “an opportunity to reduce risk ahead of a potential 200 DMA test.” .SPX YTD mountain S & P 500 in 2025. The 200-day moving average for the S & P 500 last stood at about 5,723. On Monday, the index traded between a high of 5,986 and a low of 5,811. Mag 7 problem Katie Stockton, founder at Fairlead Strategies, is currently operating under the assumption the S & P 500 will end the year higher, with a low single-digit percentage point advance and with the secular bull market intact. In the interim, however, Stockton worries the S & P 500 will be stuck in a “corrective phase” for the next several months, and is especially concerned that the Magnificent Seven stocks that led the bull rally the past two years are no longer participating. The Roundhill Magnificent Seven ETF (MAGS) , she noted, is down about 6% in 2025. “We think this is the start of something more prolonged, the megacap sort of underperformance, or at least the megacaps not being the source of upside leadership that they were before,” Stockton said. “It’s somewhat problematic for the market.” Stockton, who’s keeping an eye on support at 5,783 in the S & P 500, and on resistance at 6,128, warned that any near-term bounce — as seen early Monday — would prove fleeting. “We have weak intermediate term momentum behind the market,” Stockton said. “So, it’s like a corrective phase, right? Our longer term metrics would suggest that that corrective phase could actually keep hold for a few months, if not longer.” Diversify Corrective phases can also be healthy for the stock market, flushing out excess speculation before equities resume marching higher. The S & P 500 ended Monday about 4.8% below its most recent high. Until then, however, technicians say investors should stick to more defensive parts of their stock allocations, as well as other assets. Fairlead Strategies’ Stockton said Treasurys and gold are good places to add exposure. Elsewhere, Oppenheimer’s Ari Wald noted that the S & P Low-Volatility (SPLV) looks “more compelling” than the equal-weighted or market-cap weighted S & P 500, noting it’s outperformed during the recent market weakness. It’s up almost 7% year to date. “Looking ahead, near-term weakness in SPLV, likely during a market rebound, should be used opportunistically to increase counter-cyclical portfolio exposure, in our view,” Wald wrote. One other thing to keep an eye on: the Nasdaq Composite Index on Monday closed at 18,350 — below its own 200-day moving average, which was recently at about 18,368. .IXIC 3M mountain Nasdaq Composite trend over past three months. .
