The US SPX 500 shows signs of a potential bullish reversal after a sharp sell-off triggered by tariff threats. The US financial sector's Q3 earnings loom.
Chart of the week: US SPX 500
Key takeaways
- Potential bullish reversal ahead: The US SPX 500 CFD Index shows signs of a rebound after a sharp 3.4% sell-off, with RSI momentum exiting oversold territory.
- Financials sector stabilising: The S&P 500 Financials Sector ETF (XLF) has found support, suggesting easing underperformance against the broader index.
- Key technical levels: A break above 6,700 may signal renewed bullish momentum, while failure to hold 6,500 could lead to a deeper correction.
The US stock market had an abrupt spike in downside volatility last Friday, 10 October 2025, after the US SPX 500 CFD Index (a proxy of the S&P 500 E-mini futures) hit a fresh all-time high of 6,775 on Thursday, 9 October 2025.
The US SPX 500 CFD Index plummeted by 3.4% on Friday, its worst single-day performance since 10 April 2025, triggered by US President Trump’s tariff threats of an additional 100% levies slapped on Chinese products with effect from 1 November 2025, ahead of the earlier agreed 10 November deadline for the ongoing US-China trade truce deal.
Interestingly, Friday’s sell-off of the US SPX 500 CFD Index has stalled at around its 50-day moving average and gapped up by 2% on Monday, 13 October 2025’s Asian session after US President Trump signalled an openness to a deal with China and lowered his earlier hawkish rhetoric via a social media post on Sunday.
Fig. 1: US SPX 500 CFD Index medium-term trend as of 13 Oct 2025 (Source: TradingView)
Major US financial institutions will kickstart the Q3 earnings reporting session, starting on Tuesday, 14 October, with JPMorgan, Goldman Sachs, Citigroup, Wells Fargo, and BlackRock, followed by Bank of America and Morgan Stanley on Wednesday, 15 October.
The S&P 500 Financials sector is the second-largest market capitalisation sector in the S&P 500, with a weight of 13.4%.
We will now examine the latest technical elements and key levels to watch for the US SPX 500 CFD Index as the Q3 earnings reporting session looms for the US stock market.
Firstly, the 4-hour RSI momentum indicator of the US SPX 500 CFD Index has hit an extreme oversold level of 18, and it has just exited from its oversold region on Monday, 13 October 2025. These observations suggest that a potential bullish reversal may materialise for the US SPX 500 CFD Index.
Secondly, the ratio chart of the S&P 500 Financials Sector ETF (XLF) relative to the S&P 500, a gauge of sector strength, has stabilised and found support since early October 2025, indicating that the recent medium-term underperformance of the Financials sector against the broader index has likely eased.
Watch the 6,500 key medium-term pivotal support on the US S&P 500 CFD Index, and a clearance above 6,700 (also close to the 20-day moving average) may kickstart another fresh potential bullish impulsive up move sequence for the next medium-term resistances to come in at 6,770 and 6,850.
However, failure to hold at the 6,500 key support may trigger a deeper corrective decline sequence to expose the next medium-term supports at 6,385 and 6,210.
