sp 500 daily outlook thurs 10 sep potential recovery above 1937 support 1259002015

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has staged a deeper pull-back then expected and broke below the 1961 daily pivotal support and tumbled close to the alternate target of 1931.

Please click on this link for a recap on our previous daily outlook.

Key elements

• Yesterday’s decline in price action has invalidated the prior day’s bullish breakout from the ‘Symmetrical Triangle” range configuration (in dotted purple) as it reintegrated back into the range (see 4 hour chart).
• Despite the deeper pull-back in price action, the Index has tested and managed to hold above the lower (support) boundary of an ascending channel (in dark blue) in place since 26 August 2015 low at 1937 (see 4 hour chart).
• The 4 hour (short-term) Stochastic oscillator has dipped to its extreme oversold level which indicates that the current pull-back in price action has lose downside momentum (see 4 hour chart).
•  The hourly (short-term) RSI oscillator has exited from the oversold region and remains bullish (see 1 hour chart).
• The significant resistance stands at 2040/2050 which is defined by the former range support formed in March/April 2015 and a Fibonacci projection cluster (see 4 & 1 hour charts).

Key levels (1 to 3 days)

Pivot (key support): 1937

Resistance: 1996 & 2040/2050

Next support: 1900

Conclusion

Technical elements remain positive despite yesterday’s deeper pull-back then expected. As long as the 1937 daily pivotal support holds, the Index may shape a recovery to retest the 28 August 2015 swing high at 1996 before targeting the significant resistance zone of 2040/2050.

On the other hand, a break below the 1937 pivotal support is likely to damage the recovery scenario for a further slide towards the next support at 1900 in first step.

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