sp 500 daily outlook thurs 05 nov watch 2095 support to keep potential final push up in play 1725752

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has shaped a 0.86% decline from the 2115 minor swing high printed on 04 November 2015 after U.S. central banker, Yellen mentioned in her testimony to government officials that a 25 basis points rate hike in the benchmark overnighter fed funds rate in December would not derail the economy.  A replay of the typical “tantrum” by market participants wherever there is a hint of an interest rate hike by Fed officials.

Technically, the daily pivotal support at 2095 has managed to hold the decline. Please click on this link for a recap on our previous daily outlook/strategy.

 Key elements

• Despite yesterday’s weak performance, the Index continues to evolve in a series of “higher lows” with the previous minor swing low acting as a support at 2095.
•  Based on the Elliot Wave Principal perspective, the Index is undergoing an extended bullish wave 3/ that is in place since the 29 September 2015 low and current count suggests that it is in the midst of a final potential upleg (wave 13 of 3/) before the corrective (bearish) 4/ materialises.
• The significant resistance stands at 2138 which is defined by the exit potential of the “Double Bottom” bullish breakout, 1.618 Fibonacci projection from 24 August 2015 low to 28 August 2015 high projected from 29 September 2015 low and the upper boundary of the ascending channel (in orange) in place since 29 September 2015.
• The hourly (short-term) RSI oscillator that gauges momentum has managed to test and staged a bounce off at its trendline support.
• However, do take note the longer-term (4 hour) RSI oscillator that has continued to flash a bearish divergence signal. This suggest that the on-going uptrend from 29 September 2015 low is losing upside momentum which is in line with the aforementioned Elliot Wave count (potential final upleg – wave 13 of 3/).

Key levels (1 to 3 days)

Pivot (key support): 2095

Resistance: 2115 & 2138

Next support: 2071 & 2060

Conclusion

As long as the 2095 daily (short-term) pivotal support holds, technical element are still in favour of a potential recovery to retest the recent minor swing high at 2115 before targeting the significant medium-term resistance at 2138.

However, failure to hold above the 2095 pivotal support is likely to damage the uptrend to see a further slide towards the next support at 2071 and even 2060 next.  

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