Focus of the Bull-Bear Battle in the US Stock Market: 5500 and 4800

As Trump's tariff policy causes significant market fluctuations, Wall Street technical analysts are looking for the next direction of the S&P 500 index through charts.

On April 24, media reports indicated that the U.S. stock market has experienced severe turbulence recently, with multiple analysts agreeing that 5,500 points will be a key level for the bulls and bears, while 4,800 points may become a support line for declines. For investors, current market technical indicators show ample room for a rebound, but caution is still needed for the potential risk of retesting lows.

In the report, Jefferies' head of technical analysis, Daniel Kirsche, noted that U.S. stocks broke through the short-term trend line today, surpassing the 21-day moving average. This is the first "real" closing price above that moving average since the sell-off began at the end of March. The next target of 5,500 points is a significant resistance level worth monitoring in the short term—this level represents a 50% retracement of the recent downtrend. If the closing price exceeds this level, it may further suppress the bearish trend.

Kirsche pointed out that the market only needs to rise about 2% from Wednesday's closing price to reach 5,500 points, which would not only recover almost all of April's losses but also indicate that traders are shifting from selling to buying on dips. He emphasized:

The more times the market tests a resistance level, the greater the chance of a breakout. Once this level is broken, a rebound to 5,800 to 6,000 points looks very feasible.

4,800 Points: Potential Support Level and Retesting Risks

For traders looking for possible downside targets, 4,800 points is a level to watch closely.

JP Morgan strategist Jason Hunter believes the market could drop to this area, potentially even down to 4,500 points.

We believe this retest could form a more durable bottom.

John Kolovos, chief technical strategist at Macro Risk Advisors, stated that 4,800 points could be the bottom.

However, given the recent downtrend, a drop to 4,700 points seems more likely, and it could even test deeper down to 4,480 points or 4,300 points.

Mixed Market Breadth and Momentum Signals

Traders are also paying attention to market breadth indicators, as an increase in the number of stocks participating in the rebound will indicate a more reliable trend.

Goldman Sachs noted that as signs of de-escalation in the trade war begin to emerge, the net leverage ratio of long and short positions in the U.S. remains close to a five-year low. Improvements in market technicals suggest that investors have increasingly compelling reasons to bet on a stock market rebound.

The net long-short leverage is an indicator that measures investors' bullish and bearish sentiment towards the market. In simple terms, if this indicator is low, it indicates that investors are currently cautious about the market and are not overly betting on whether it will rise or fall. Currently, the net leverage ratio of long and short positions in the U.S. fundamentals and the total long-short ratio are showing a trend of recovery from low levels.

At present, 31% of the stocks in the S&P 500 index are trading above their 200-day moving average, up from less than 20% in early April. JC O'Hara, Chief Technical Strategist at Roth Capital Partners, pointed out:

Bulls hope this number can approach 50%.

Another indicator relied upon by market observers is the Relative Strength Index (RSI). This indicator fell below 30 in early April, indicating excessive selling, but has not yet reached overbought levels during the subsequent rebound, which typically indicates that buyer enthusiasm has peaked. Jefferies' Kirsche summarized:

This suggests that the index still has considerable room for upward movement