sp 500 daily outlook thurs 25 feb 2016 another potential downleg looms below 1947 range top 17987120

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has plummeted as expected from the 1947 range top resistance and hit the short-term downside target at 1900 (printed a low of 1890).

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

Key elements

• Yesterday, the Index did a “remarkable” reversal of 2.48 % from the 1890 low to record a U.S. session high of 1937. Interestingly, it has pushed up just below the range top in place since 13 January 2016 swing high area at 1947.
• The 4 hour Stochastic oscillator has almost reached its extreme overbought level which suggests limited upside potential at this juncture.
• The next support to watch will be at 1885/74 which is defined by a confluence of elements (50% Fibonacci retracement of the rally from 11 February 2016 low to 23 February 2016 high of 1946 + 1.00 Fibonacci projection of the down move from 23 February 2016 high of 1946 to yesterday low of 1890 projected from today’s Asian session high of 1941 + minor swing low area of 16 February 2016 that was a former resistance level)

 Key levels (1 to 3 days)

Pivot (key resistance): 1947

Supports: 1885/74 & 1860

Next resistances: 1963 (weekly pivot) & 1994

Conclusion

The Index has pushed back up towards its range top in place since 13 January 2016 swing high area. Technical elements are advocating for another round of potential downleg below the 1947 short-term pivotal resistance to target the 1885/74 support next.

On the flipside, a break above the 1947 short-term pivotal resistance is likely to negate the pullback scenario for a test on the 1963 weekly pivotal resistance. Only a clearance above 1963 may see a further extension of the countertrend rally towards the next resistance at 1994 (the former swing low area of 14 December 2015 that has been tested thrice in the past).

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.