The bottom-fishing funds are coming to the rescue, but the technical aspects of the S&P 500 still signal caution.

For two consecutive trading days, the US stock market opened with sharp declines, as the Middle East conflict prompted investors to collectively turn to safe havens. However, for two consecutive days, there were bargain buyers who came in mid-day to support the market and erase most of the previous losses. For investors who have shifted from offense to defense, the current market is confusing. But to technical analysts, this kind of trading reveals complacency. Analysts point out that some key support levels have been tested, and although they have mostly held up, if the volatile market continues, these support levels may gradually erode. The S&P 500 index plummeted 2.5% to 6710.42 points on Tuesday, briefly falling below December lows before closing down about 0.9%. This drop also caused the index to break below its 100-day moving average, a level that has been a solid support level for the past six months. John Kolovos, Chief Technical Strategist at Macro Risk Advisors, said that the key level to watch closely in the short term is around 6720 points, the December low. If this level is broken, the probability of retesting the November low increases. Traders are also closely watching the 200-day moving average around 6570 points, which is usually considered a long-term support level. If the market falls further, the next support level is around the November low, about 4% below Tuesday's closing price. But Kolovos believes that if this level doesn't hold, the next step could be towards the 6100-6200 range, entering a correction phase. S&P 500 index futures rose 0.4% in early trading on Wednesday, recovering from the previous nearly 0.8% decline. The market has sufficient reason to expect more volatility: surging energy prices could reignite inflation fears, trade policies are in chaos, there are signs of pressure in the private credit market, and the impact of artificial intelligence is putting pressure on the market. A pullback of 10% or more from recent highs, technically known as a "correction," is quite common and is a healthy part of the market cycle. However, the last time the S&P 500 entered a correction zone was in early 2025, when the market was concerned about trade uncertainty, economic growth, and the sudden rise of Chinese AI startup DeepSeek threatening booming tech stocks. The tariff dispute in April worsened the sell-off. Mona Mahajan, Investment Strategy Head at Edward Jones, said: "The last significant correction was probably in April last year, when the S&P 500 almost entered bear market territory. Since then, the index has been almost straight up." Market volatility has been low for the past few months - at least at the index level. Barclays data shows that as of mid-February, the trading range of the S&P 500 index since the beginning of the year is the narrowest since the 1960s. Mahajan said: "This looks more like a healthy consolidation rather than a healthy correction, as the market can reprice itself through consolidation." The momentum indicator also sends cautious signals. The S&P 500's Relative Strength Index (RSI) has been on a downward trend for several months and is currently hovering around the 43 level. Although still above the traditional oversold line of 30, it indicates that there may still be downward potential before sentiment reaches total pessimism. In April last year, this indicator fell below 22, and only after Trump announced a series of broad global tariffs did the stock market hit bottom. Not all technical analysts are bearish. Some believe that a rebound to 7000 points for the S&P 500 is not impossible, even though the index has never closed above this level. Rich Ross, Head of Technical Analysis at Evercore ISI, said: "I still see the index breaking through 7000 points." He believes that even if it tests the 200-day moving average, the overall upward trend remains intact. "In this market, you have to give up something to gain something."