sp 500 daily outlook thurs 18 feb 2016 bullish tone remains intact above 19091900 support 1797852016

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has staged the expected rally above the 1879 pre-defined support level (printed a low of 1885) and hit our expected upside target of 1928.

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

Key elements

• Since the low of 1807 printed on 11 February 2016, the Index has rallied by 7% (including yesterday’s gain). Based on current price action, this is the best performing week since the start of the 2016.
• Despite these “hefty” gains, technical elements are not shown any clear signs of exhaustion/bearish reversal yet. The daily (medium-term) RSI oscillator has broken above its former descending resistance and still has room for further upside before reaching its overbought region. This observation suggests that upside momentum remains intact.
• Based on  the Elliot Wave Principal, the on-going bullish wave v appears to be an extension as price action has only traced out a three waves movement from the end of wave iv (low of 1874). The minimum extended 5^th wave target for wave v target stands at 1961 which is derived from the 1.00 Fibonacci projection of the rally from the length of wave i to iii projected from wave iv low of 1874 seen on 17 February 2016 @12am.
• The expected minimum extended 5^th wave target of 1961 also confluences closely the upper boundary of the short-term bullish ascending channel in place since 11 February 2016 low and just below the 02 February 2016 swing high area of 1947/54.
• The lower boundary (support) of the short-term ascending channel now rests at the 1909/1900 zone which is also the 23.6% of the current rally from 11 February 2016 low to the current high of 1934.
• The hourly (short-term) Stochastic oscillator has already dipped down from its extreme overbought level and it is now coming close to its oversold region. This observation suggests a potential upturn in price action is round the corner.

Key levels (1 to 3 days)

Pivot (key support): 1909/1900

Resistances: 1947/54 & 1961

Next support: 1874

Conclusion

As long as the 1909/1900 short-term pivotal support holds, the Index is likely to shape another potential upleg to target the next resistance at 1947/54 with a maximum limit set at 1961.

However, failure to hold above 1900 support may negate the bullish tone for  a further slide to retest the 17 February 2016 minor swing low of 1874.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.