SP500 tests previous highs; bulls need to defend it

SP500 tests previous highs; bulls need to defend it
Sentiment in the stock market deteriorated notably over the previous days, undermined by the more-than-expected hawkish Powell and the new COVID variant Omicron.
Traders paid attention to today's US jobless claims. Initial jobless claims rose from a 53-year low at 194,000 to 222,000 last week. On the other hand, continuing claims improved further to 1.956 million, down from 2.063 million previously.

The SP500 index declined circa 5% from its all-time highs reached in November, and it was trading somewhat higher on Thursday, last seen at around 4,525 USD.

On its way down, the index failed to defend the August highs of 4,550 USD, and it also fell below the 50-day moving average at the same price. Therefore,  the short-term outlook changed to bearish for as long as the price trades below 4,550 USD.

The next notable support is in the 4,480 USD zone, which could be tested later today during the US session. Bulls must reappear here or risk a more significant correction toward the September lows near 4,300 USD.

On the other hand, should the index jump back above 4,550 USD, the sentiment would likely change to bullish again, pushing the index to 4,600 USD in the initial reaction.
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