sp 500 daily outlook friday 08 jan 2016 potential short term rebound above 1930 1792422016

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has reacted off the 1980 short-term pivotal resistance and plummeted during the late U.S. session as expected. It has almost reached our downside target at 1930 (printed a low of 1936).

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

Key elements

• The Index has managed to stage a rebound during today’s Asian session above the 1930 support which is defined by a Fibonacci cluster.
• The hourly (short-term) Stochastic oscillator has flashed a bullish divergence signal at its oversold region which suggests that short-term downside momentum has started to abate.
• The intermediate resistance stands at 1963 which is the trendline resistance in place since 06 January 2015 high @3am.
• The next resistance to watch will be at 1994 which is defined by the former congestion support area of 27 August 2015 to 14 December 2015 (see daily chart).
• The key long-term support rests at 1890/1880 which is defined by the lower boundary of the long-term ascending channel and a Fibonacci cluster. The current down move has not tested this key inflection level which implies that the bears are not out of the woods yet (see weekly chart).

Key levels (1 to 3 days)

Pivot (key support): 1930

Resistance: 1963 & 1994

Next support: 1890/1880

Conclusion

Short-term technical elements are advocating for a potential rebound at least in the short-term. Today’s pivotal support stands at 1930 and a break above the 1963 trendline resistance is likely to trigger the expected rebound to target the next resistance at 1994.

On the flipside, a break below the 1930 pivotal support may see a further plunge to test the key inflection level at 1890/1880.

Disclaimer

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