sp 500 daily outlook thurs 15 oct potential recovery scenario remains intact above 1992 key support

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has tested but managed to hold above the key 1992 weekly pivotal support.

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

Key elements

• The Index has tested the 1992 weekly pivotal support (pull-back support of the “Double Bottom” bullish breakout).
• Current price action is now breaking above the former short-term trendline resistance (in dotted green) joining the highs since 13 October 2015.
• In conjunction, the hourly (short-term) RSI oscillator has also pierced above its trenline resistance and the 50% neutrality level. Prior to this breakout, it has also flashed a bullish divergence signal near its oversold region. These observations suggest that the upside momentum has started to build-up
• The significant resistance rests at 2040/2050 which is the pull-back resistance of the former swing lows from 11 March to 05 June 2015 and the 200-day Moving Average.
•  The next support rests at 1958/1950 which is defined by the trendline support (in orange) in place from the 29 September 2015 low and the 50% Fibonacci retracement of the up move from 02 October 2015 low to 13 October 2015 high.

Key levels (1 to 3 days)

Pivot (key support): 1992 (weekly pivot)

Resistance: 2023 & 2040/2050

Next support: 1958/1950

Conclusion

No change in our expectations for the Index as the 1992 remains the key support to watch for a potential recovery towards the 2023 short-term range top before targeting the significant 2040/2050 resistance zone.

However, failure to hold above the 1992 weekly pivotal support may invalidate the recovery scenario to see a deeper slide to test the next support at 1958/1950

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