sp 500 daily outlook fri 17 june 2016 right below 2085 resistance for a potential bearish reaction 1

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has staged the expected push up of 1.3% from the 2054/52 minor support (printed a low of 2049) towards the predefined intermediate resistance at 2076 (printed a high of 2079 in the closing hour of yesterday’s U.S. session) as per highlighted in our prior short-term technical outlook/strategy published yesterday (click here for a recap).

Today’s key U.S. economic data releases/events as follow:

• Options expiry (Triple Witching – simultaneous expiration of stock index futures, stock index options and stock options)
• Housing Starts for May @1230GMT (1.150M estimates)
• Building Permits for Mat @1230GMT (1.150M estimates)

Key elements

• The current push up in price action is now right below the key short-term pivotal resistance of 2085 as per highlighted in yesterday’s short-term technical outlook/strategy. It is  now reacting off the short-term steeper descending trendline resistance (depicted in pink) from 10 June 2016 high of 2117 which is also below the 2085 pivotal resistance (see 1 hour chart).
• The 4 hour Stochastic oscillator has reached an extreme overbought level which suggests limited upside potential in price action at this juncture as short-term upside momentum has been overstretched.
• The next significant support rests at 2036 after which is medium-term range support that triggered a short squeeze (bear trap) on 19 May 2016 where the social mood was overly bearish due to an impending Head & Shoulders pattern.
• The 2085 short-term pivotal resistance now also confluences with the 50% Fibonacci retracement of the recent decline from 09 June 2016 high to yesterday’s low of 2049.
• Based on the Elliot Wave Principal and fractal analysis, the current push up in price action from yesterday’s low of 2049 is likely to be a minor corrective wave 2 with a potential cyclical high target at 2085.  However, there is not enough elements at the moment to justify the end of the minor corrective wave 2.

Key levels (1 to 3 days)

Pivot (key resistance): 2085

Supports: 2054/52 & 2036

Next resistance: 2098/2100

Conclusion

Coming close to 2085 pivotal resistance for a potential push down. As long as the 2085 daily short-term pivotal resistance is not surpassed, the Index is likely to see at least a potential bearish reaction to retest the minor support at 2054/52. Only a break below 2052 may trigger a further downside movement to target the 2036 medium-term range support.

However, a break above the 2085 short-term pivotal resistance may negate the bearish tone to see a further push up to test the next resistance at 2098/2100 (descending trendline and the minor swing high of 13 June 2016).

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