The S&P 500 opened with a gap lower, but bears may take a pause for consolidation following last week’s 8.75% loss

The S&P 500 opened with a full-point gap lower on Monday, hitting its lowest levels since mid-January 2024, continuing the decline from last week’s 8.75% drop.

This sharp drop came after President Trump announced tariffs on all imports to the US last week, sending strong shockwaves through global markets and sparking a panic sell-off in a broader risk-averse environment.

The index remains on a bearish path for the second consecutive month, with a strong acceleration to the downside last week, bringing the total loss to 20% from the all-time high reached in mid-February.

Although the bearish momentum slowed on Monday, and the market moved within a narrower range, the continuing high uncertainty over the potential negative impact of US tariffs on the global economy keeps the overall outlook very bearish.

Oversold conditions suggest that bears may pause for consolidation or a limited correction, which, if the broader conditions do not improve significantly, could offer better selling opportunities.

The formation of a bear trap pattern (below the Fibonacci support at 4889) further supports the signals of consolidation or correction.

Initial resistance is at the 5040 level, which should ideally keep the gap unfilled. A stronger rebound would face significant resistance at 5179 (Fibonacci 38.2% of 5792/4801) and 5296 (50% retracement / daily Tenkan-sen), where extended upward moves should be capped.

Res: 5000; 5050; 5179; 5296
Sup: 4889; 4801; 4680; 4591