The S&P 500's best week in months. Now what?SPX500SKILLING:SPX500SkillingAfter five consecutive weeks of losses, US equities staged a sharp recovery last week. The S&P 500 posted its strongest weekly gain since May, bouncing from the low 6,300s back toward the 6,500–6,600 area. For a market that had been grinding lower since the start of the Iran conflict, it was a meaningful shift in tone, but not necessarily a clean all-clear. The bounce was partly driven by better-than-expected economic data and some tentative signs that a diplomatic framework around the Strait of Hormuz may be taking shape. Those signals were enough to bring buyers back in. But the chart tells a more complicated story. What the chart shows The S&P 500 is currently trading below both its 50-day and 200-day moving averages. That matters. Both levels — sitting around 6,790 and 6,640 respectively — now act as overhead resistance rather than support. A market that bounces but can't reclaim its key moving averages is not yet a market that has fully repaired the damage done. The rally also has to contend with the fact that market breadth remains weak. Only a minority of stocks within the index are trading above their own 50-day averages, which means the recovery has been narrow rather than broad-based. Historically, narrow recoveries within broader downtrends have sometimes struggled to sustain momentum, though past patterns are not necessarily indicative of future price behaviour. To the downside, the 6,300–6,350 area remains a level that traders may be watching closely. It caught the market once in late March, though there is no guarantee it would do so again. Two scenarios heading into this week The bounce holds and builds: If the S&P 500 can push back above the 200-day moving average and hold there, the character of the market changes. That would suggest the five-week selloff was a correction within a larger trend rather than the start of something more serious. The key test is whether buyers step in on any dip rather than sellers stepping in on any rally. The rally fades: If price stalls in the 6,600–6,700 area and rolls over, it would confirm that the moving averages are acting as genuine resistance. In that scenario, a retest of the March lows becomes the more likely path. Friday's CPI data, which could show the largest single-month inflation jump in years, is a key event that traders will likely be watching closely for directional cues. The S&P 500 has had its bounce. This week tells us whether it means anything. Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice or recommendation to trade.70% of retail CFD accounts lose money. You should only invest money you can afford to lose. Past performance is not indicative of future results