sp 500 daily outlook fri 15 jan 2016 potential further rebound above 18901880 key support 1793432016

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has tested and held above the key long-term support at 1890/80 as expected. Thereafter, it shot up and almost hit our expected short-term upside target at 1936 (printed a high of 1935).

*Today’s will be options’s expiry for equities, equities index and ETF, thus do expect an increase in volatility as we will also have  key economic data releases (Retails Sales & Industrial Production). 

Please click on this link for a recap on our previous short-term daily outlook/strategy.

Key elements

• The Index has reacted off just below the short-term resistance at 1936 (the former trendline support that linked the former higher lows of 12 January to 13 January 2015) after it staged its best single day performance of 1.85%  seen this week.
•  The next resistance stands at 1970 which is defined by the swing high area of 15 January 2016 and the 50% Fibonacci retracement of the decline from 30 January 2016 to yesterday’s low of 1878.
• The hourly (short-term) Stochastic oscillator has dipped back into its oversold region which suggests that the current drop (profit-taking) seen in today’s Asian session is overdone and a potential upside reversal is round the corner.

Key levels (1 to 3 days)

Intermediate support: 1900

Pivot (key support): 1890/80 (key long-term)

Resistances: 1936 & 1970

Next support: 1835/20

Conclusion

As long as the key pivotal support at 1890/80 holds, the Index is likely to see another upside movement to retest 1936 before targeting the next resistance at 1970.

On the flipside, a break below the 1890/80 key support is likely to jeopardise the long-term bullish trend in place since March 2009 for a further drop to retest the range support area of 24 August to 29 September 2015 at 1835/20.

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