S&P500: Telling Times Ahead

Technicals | Mar 01 2019

Bottom Line 28/02/19

Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 2550-2500 / 2347 / 2135
Resistance Levels: 2817 / 2941 (new all time highs)

Technical Discussion

The S&P 500 closed slightly in the red last night be it well off it's intraday lows. Testimonials to U.S congress from Trade and Central Bank officials had little in the way of surprises attached and this steadied the ship nicely with stocks gradually coming back on the bid after a shaky start to trade. Investors are continuing to watch with the interest on trade talks between the U.S and China in particular. Of the 11 major S&P market sectors, seven closed lower with healthcare being the worst performer. Advancers and decliners were pretty much even and volume was smack back on average when compared to the last 20 trading sessions. Lets check in on the technicals.

Reasons to stay longer term bullish:
→ S&P 500 earnings to date remain well supported (be it some valuations stretched)
→ Elliott Wave count continues to have motive bigger picture
→ retracements have been healthy and well supported to this point
→ Higher degree Wave-[4] may have now locked in a major low ?

'We continue to believe a higher degree Wave-[4] is unfolding here, either having commenced in late January and therefore highly evolved. Or having started at the end of September with this most recent move lower only being the first Wave-A of such a move.' The preferred count as everyone knows is the higher degree Wave-[3] high option completing in January 2018, with the higher degree Wave-[4] having completed as a larger expanded flat back in late December 2018. Yes we are keeping an open mind with the alternate count yet for now the preferred count is our prime focus. Price is now at a very interesting juncture as it has finally made it's way into our proposed inflection zone just above 2800. It is here where the 200 day day moving average may make its presence felt. And it is here where price has rejected from since October last year. We have some Type-A bearish divergence in play to add to the mix, with price bars narrowing and volume flat. Of course price action can simply ignore all this and continue to head higher as part of this rare V-shaped recovery, yet a pullback from here would certainly be a more healthy outcome shorter term. If we do get the breather then the 2550 – 2500 support zone may line itself up to be retested for strength. The next week or so is going to be very telling.

Trading Strategy

So the big question is, will we get the proposed dip now that price has entered into our inflection zone. No one knows for sure of course yet if the confluence of head winds right around present levels can produce a healthy breather, then an aggressive yet low risk swing trade opportunity from lower is what we are going to be on the look out for. We will continue to monitor.

Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).

Risk Disclosure Statement

THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.

Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms