sp 500 daily outlook thurs 28 jan 2016 maintain bullish bias above 1874 support 1795292016

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What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has rallied as expected and met the first short-term upside target of 1915 (printed a high of 1917) before a 2.3% sell-off occurred to print a low of 1872 in the closing hours of the U.S. session.

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

Key elements

• Despite the 2.3% sell-off that occurred after the latest Fed’s monetary policy decision and statement, the Index has managed to hold above the short-term pivotal support at 1874 which is the lower boundary of bullish ascending channel in place since 21 January 2016 low and a Fibonacci cluster.
• The daily (medium-term) RSI oscillator has continued to inch upwards and still has room for further potential upside before reaching its trendline resistance. In conjunction with price action, the similar resistance with be at the 1935/54 zone which is the pull-back resistance of the former long-term trendline support from March 2009 low and the 50% Fibonacci retracement of the steep decline from 30 December 2015 high to 21 January 2016 low.
• The significant resistance remains at the 1935/54 zone which is our expected medium-term upside target (recap here as per highlighted in our latest weekly outlook/strategy).  Right now, the 1935/54 resistance zone also confluences closely with the upper boundary of the ascending channel and the 0.764/1.00 Fibonacci projection of the last Thursday up move from 21 January 2016 low to 25 January 2016 high projected from 26 January 2016  low of 1858.

Key levels (1 to 3 days)

Pivot (key support): 1874

Resistance:  1915, 1935 & 1954

Next support: 1851 (medium-term pivot)

Conclusion

As long as the 1874 short-term pivotal support holds, we are maintaining our short-term bullish technical view for another round of potential up move to retest 1915 before targeting the next resistance at 1935 with a maximum limit set at 1954.

However, a break below the 1874 pivotal support is likely to negate the bullish tone too see a further slide to test the medium-term pivotal support at 1851

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