Technicals | Nov 25 2015
Bottom Line 24/11/15
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 2019 / 1972 / 1867 / 1820
Resistance Levels: 2117/ 2135 (all time highs)
Technical Discussion
So does [S&P500] price immediately swing higher from here, or will it embark upon some further consolidation to build more energy before breaking out ? Our preference remains with the latter and as such we would be more than happy shorter term to see price head back towards the support line circa 1972. The main reason for this is that what we believe we are witnessing right here is a higher degree pattern, and they simply tend to take more time to complete than what we have seen thus far. So ideally some upcoming weakness over the next couple weeks , then price starts the process towards an energy building breakout back into new all time highs. Nothing to worry about here whilst 1820 continues to hold.
Reasons to stay longer term bullish (further consolidation still possible):
→ S&P 500 earnings continue to be well supported overall
→ The IT sector is seeing ongoing rapid expansion and innovation
→ Elliott Wave count continues to have motive bigger picture
→ the expected clean out has occurred – potential that a low has now locked in
The Wave-3 of (3) of [3] high at 2135 is our preferred count and for pattern and time symmetry we would like to see some further weakness over the next couple of weeks as a coiling type process continues to unfold. Preferably a symmetrical triangle or a similar type congestion pattern. As we keep saying, the degree of the wave count right here is higher, so it does continue to call for more time being required. In case price action does not comply though, we presently have long trade recommendations in at higher levels on both the S&P 500 and the NASDAQ. For now though lets look for a Wave-C to the downside to kick into gear more convincingly, which should then provide a low risk set up for us to trade in a couple of weeks time, and at lower levels. A lower swing high pattern from here is also likely to spark some Type-A bullish divergence. So combined with a move into the 1972 demand zone, this is certainly an ideal area in our books to trade from, if price decides to go there. Bigger picture we are still siding with the Bulls on U.S Indices.
Trading Strategy
We have an early recommendation in place now long at 2117 with stops below 2019 if triggered. Like we said though, a swing trade opportunity down towards 1972 would be more ideal so we wait and see. It would be aggressive yet also low risk / high reward which is exactly what we are looking for. This market has been extremely difficult to time a decent trade off.
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