The S&P 500 ETF (SPY) is trading around $684, hovering precariously near its 20-day moving average after a volatile November selloff that rattled bulls and raised questions about the sustainability of 2025’s impressive rally.
But now the burning question is:
Will SPY reclaim its uptrend and push toward new highs above $690, or is this consolidation the calm before another leg down toward the 50-day EMA?
S&P 500 ETF (SPY): Daily Chart
SPY’s trend remains bullish but is in a maturing, grinding advance with momentum fading and price vulnerable to a deeper mean‑reversion toward the 50‑ or even 200‑day EMA if support gives way.
Trend and Structure
The daily chart reveals a powerful uptrend that dominated most of 2025, with SPY surging from the April lows near $480 to recent highs around $690, a gain of over 40% for the year.
Price remains above all three key exponential moving averages (EMAs), with the 20-period EMA at $679.51, the 50-period EMA at $674.14, and the 200-period EMA at $636.50.
The bullish stacking of these indicators, where shorter-term averages are above longer-term ones, confirms the medium-to-long-term uptrend remains technically intact.
However, the November action tells a more nuanced story.
SPY experienced a sharp selloff and saw the index plunge from the $690 area down to test the $640 region, a decline of roughly 7% that triggered widespread concern about a deeper correction.
But here’s the thing: the subsequent V-shaped recovery has brought the price right back to the EMA cluster, suggesting strong underlying demand at lower levels.
The market bounced decisively off the $640 support zone and has now reclaimed both the 50-day and 20-day EMAs.
The current price action shows SPY consolidating in a tight range between $680 and $690, with relatively indecisive candlesticks forming over the past several sessions.
This type of consolidation after a sharp decline and recovery often precedes either a breakout continuation or a retest of recent lows.
Momentum and MACD Analysis
The MACD indicator currently reads -0.48, residing in negative territory and signaling a loss of bullish momentum compared to the strong readings seen throughout the summer and early fall rally.
The MACD histogram shows the indicator recently crossed below its signal line, generating a bearish crossover that coincided with the November selloff.
While the MACD has stabilized and is no longer diving deeper into negative territory, it hasn’t yet turned positive or generated a bullish crossover that would confirm renewed upside momentum.
This divergence between price action (which has recovered substantially) and momentum (which remains negative) creates an interesting technical setup.
Either momentum will catch up with price and generate a bullish MACD crossover to confirm the recovery, or price will roll over to align with the weaker momentum picture.
The histogram bars show diminishing selling pressure, but haven’t yet flipped to show meaningful buying momentum.
This neutral-to-slightly bearish momentum reading suggests caution for aggressive bullish positions until we see clearer evidence of momentum confirming the price recovery.
Key Support and Resistance Levels
Resistance levels to watch:
- Immediate resistance: $688-$690 (recent consolidation highs)
- Major psychological level: $700 (round number, untested territory)
- Extended target: $710-$720 based on channel projection if breakout occurs
Critical support levels:
- First line of defense: $679-$680 (20 EMA, current consolidation floor)
- Dynamic support: $674 (50 EMA, successfully held during recent recovery)
- Strong support zone: $660-$665 (previous consolidation area from October)
- Major support: $636 (200 EMA, key long-term trend indicator)
- Critical support: $640-$645 (November low, line in the sand for bulls)
The 20 EMA at $679.51 is the immediate level to watch.
A decisive break below this would likely trigger a retest of the 50 EMA at $674, while a hold above it keeps the door open for a retest of the $690 resistance.
The November low around $640-$645 now serves as the critical support that must hold to maintain the overall bullish structure.
A break below that level would signal that the correction has more room to run and could target the 200 EMA at $636 or even the psychological $600 level.
Trading Outlook and Risk Assessment
SPY is at a crossroads, consolidating near key short-term moving averages with conflicting signals between price recovery and momentum weakness.
The current setup offers opportunities for both bulls and bears, but requires patience and precise risk management given the mixed technical picture.
Risk-reward currently favors waiting for a clear directional break rather than forcing trades in this consolidation zone.
Bullish Scenario
A decisive break and close above $690 would confirm that the November selloff was merely a healthy correction within a larger uptrend. This would target the psychological $700 level and potentially $710-$720 as extended objectives.
If this scenario plays out, we’d expect to see the MACD generate a bullish crossover and move back into positive territory, confirming the momentum shift.
The fundamental backdrop of resilient economic data, potential further Fed rate cuts in 2026, and year-end positioning flows would support this outcome.
Bulls would gain confidence if SPY can maintain support above both the 20 EMA and 50 EMA, keeping the higher-low structure intact.
A breakout above $690 on strong volume would be the trigger signal for new long entries.
Bearish/Correction Scenario
The negative MACD reading and the failure to convincingly reclaim the prior highs suggest the November selloff may have been more than just a shakeout.
If SPY breaks below the $679-$680 support zone and the 20 EMA, it would likely trigger a retest of the 50 EMA at $674.
A more significant concern would arise if price breaks below $674, which could accelerate selling toward the $660-$665 zone or even the November lows at $640-$645.
The weakening momentum shown by the MACD supports the possibility of at least a retest of the lower end of this range.
Bears looking for short opportunities or those wanting to buy protective puts should watch for a confirmed break below the 20 EMA with increasing volume.
A daily close below $678 would be the trigger for defensive positioning.
Near-Term Consolidation
The most likely scenario in the immediate term may be continued consolidation between $680 and $690 as the market digests recent gains and awaits year-end catalysts.
This would allow the MACD to potentially base and generate a bullish crossover without the price needing to make new highs immediately.
Traders could look for range-bound strategies or wait for a clear break of either boundary before committing to directional trades.
Longer-Term Considerations
As long as SPY remains above the 50 EMA at $674, the intermediate-term uptrend structure remains viable.
The 200 EMA at $636 represents the ultimate line of defense for the long-term bull market.
The November selloff tested the resolve of bulls but ultimately found buyers willing to step in at the $640 level.
Whether those buyers have enough conviction to drive SPY to new highs or whether they’ll be overwhelmed by distribution at current levels will be answered in the coming sessions.
Watch how the price reacts at the current $680-$690 consolidation range. That will likely determine the trajectory for early 2026.
