S&P 500 opens with gap lower but bears may pause for consolidation

S&P500 opened with one full figure gap lower on Monday and hit the lowest levels since mid-January 2024, in extension of last weeks 8.75% drop.

The price tumbled after President Trump announced implementation of tariffs on all goods imported to US last week, which sent strong shockwaves through global markets and sparked a panic selloff in wider risk aversion.

The index remains in a bearish path for the second consecutive month, with strong acceleration lower seen last week that makes the total loss of 20% from new all-time high, hit in mid-February.

Although bears slowed on Monday and move within a narrower range, persisting high uncertainty about the magnitude of negative impact from US tariffs on global economy, keeps overall picture very bearish.

Oversold conditions add to signals that bears may take a breather for consolidation / limited correction which should (if general conditions do not improve significantly) offer better selling opportunities.

Formation of bear trap pattern (under Fibo support at $4889) add to signals of consolidation/correction.

Initial resistances at $5040 zone should ideally cap and keep the gap unfilled, while stronger bounce would face significant obstacles at $5179 (Fibo 38.2% of 5792/$4801) and $5296 (50% retracement/daily Tenkan-sen) where extended upticks should be capped.