sp 500 daily outlook thurs 26 may 2016 mixed elements neutral between 2100 2083 1812962016

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has staged a further squeeze up beyond our expectations and broke above the 2068/73 medium-term pivotal resistance. Our preferred medium-term bearish view for a further direct drop has been invalidated.

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

Today’s key U.S. economic data releases/events as follow:

1)      Initial Jobless Claims for the week ending 20 May @1230GMT

2)      Durable Goods Orders for Apr @1230GMT

3)      Pending Home Sales for Apr @1400GMT

4)      FOMC Member Powell Speech @1600GMT

Key elements

• Current price action is now coming close to a significant resistance at 2100 which is the descending trendline resistance in place since 17 May 2016 high that capped the prior rallies from 24 August 2016 low and 11 February 2016 low (see daily chart).
• In conjunction, the daily RSI is now testing its resistances as well.
• The near term support now rests at 2083 which is the former minor swing high area of 11 May 2016 and the 23.6% Fibonacci retracement of the sharp rally from 24 May 2016 low @3pm to yesterday’s high of 2095.
• The next support stands at 2071/63  which is defined by the pull-back support of the descending channel bullish breakout (in dotted green), former minor swing high area of 17 May 2016 and 50%/61.8% Fibonacci retracement of the sharp rally from 24 May 2016 low @3pm to yesterday’s high of 2095.

Key levels (1 to 3 days)

Resistances: 2100 & 2138

Supports: 2083 & 2071/63

Conclusion

Current price action is now coming close to a significant resistance at 2100 with no clear technical elements to justify anticipation for a bullish breakout. Thus we turn neutral in short-term between 2100 and 2083. Only a break above 2100 is likely to propel the Index higher to seek a test in its current all-time high/52-week high of 2138.

On the other hand, a break below 2083 is likely to open up scope for a deeper pull-back to target the 2071/63 support zone.

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