sp 500 daily outlook fri 22 apr 2016 at a precarious juncture watch the first support at 2087 180786

(Click to enlarge charts)

What happened yesterday/earlier

The U.S. SP 500 Index (proxy for the S&P 500 futures) has started to inch down below the 2105/110 pivotal resistance but held above the 2087 short-term support. After the close of the U.S. session, key names such as Alphabet/Google (GOOGL) and Microsoft (MSFT) have reported the lesser than expected Q1 2016 earnings numbers and their stock price took a beating in the after-hours trading session.

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

Today upcoming key U.S. economic data will be as follow:

1)      Markit Manufacturing PMI for Apr @1345 GMT

2)      Baker Hughes US Oil Rig Count @1700 GMT

Key elements

• The daily charts of all the major cash indices (S&P 500, Nasdaq 100 & Russell 200) are still showing exhaustion signs at their respective key medium-term resistances. The S&P 500 has shown a bearish “Evening Star” candlestick pattern after taking into account the past 3 days of price action. The Nasdaq 100 is now on a brink of potential near term collapse if the 4496 support gives way (preferably a daily close below it).
• Current price action of the U.S. SP 500 Index is testing the lower boundary of the short-term bullish ascending channel in place since 12 April 2016 low @6am which coincides with the key short-term support at 2087 that we have been emphasising since 2 days ago.
• The 2087 key short-term support is defined by the former minor swing high area of 15 April 2016 and the 50% Fibonacci retracement of the last minor upswing move from 18 April 2016 low @2pm to the 21 April 2016 high of 2111.
• The next short-term support rests at 2065 which is minor swing low area of 18 April 2016 that also coincides closely with the earlier congestion area (the pink boxes) of the former descending range from 07 April to 11 April 2016.

Key levels (1 to 3 days)

Intermediate resistance: 2101

Pivot (key resistance): 2105/110

Supports: 2087 & 2065

Next resistances: 2120 & 2138

Conclusion

Given that the hourly (short-term) Stochastic oscillator has reached its oversold region, the Index now may see a rebound towards the 2101 intermediate resistance first before another dip occurs and it needs to have a break below the 2087 support in order to trigger a potential significant decline towards to target the 2065 support in the first step.

However, a daily close above 2110 is likely to invalidate any bearish move for a further potential push up towards 2120 before targeting the significant 52-week week/current all-time high at 2138.

Charts are from City Index Advantage Trader Pro & eSignal

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