sp 500 daily outlook tues 03 may 2016 short term bearish trend remains intact for a potential push d

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has pushed higher yesterday in light of a weaker than expected ISM Manufacturing PMI for April (50.8 versus an expectation of 51.4) which increases the probability for the U.S. Federal Reserve to push forward its next policy interest rate hike.

Interestingly, yesterday’s advance in the Index has managed to stall at our medium-term intermediate resistance of 2080 (printed a high of 2083) as per highlighted in our weekly outlook/strategy before it staged a sell-off in today’s European session.

Please refer to this link for a recap our latest weekly technical outlook/strategy published on Sunday.

Key elements

• The key short-term resistance remains at 2083 which defined by  the former congestion swing low areas from 22 April to 27 April 2016.
• Based  on the Elliot Wave Principal and fractal analysis, the Index is likely to be undergoing a potential final downleg, wave v to complete a five wave impulsive bearish cycle/structure of a minor degree, labelled as a. The potential end target of wave v of a rests at the 2044/2036 zone which is defined as a Fibonacci cluster (23.6% projection retracement of the whole up move from 11 February 2016 low to 21 April 2016 high of 2111 + 1.618 projection of the down move distance from 21 April 2016 high to 25 April 2016 low + 0.618/0.764 projection of the down move distance from 21 April 2016 high to 29 April 2016 low) before a potential corrective rebound, wave b materialises.
• The abovementioned 2044/2036 target derived from fractal analysis also confluences with the graphical swing low areas of 8/12 April 2016 at 2036 (see daily chart).
• The hourly (short-term) Stochastic oscillator is coming close to its extreme oversold level which highlights the risk of a short-term rebound in price action as downside momentum is getting overstretched at this juncture.

Key levels (1 to 3 days)

Intermediate resistance: 2076

Pivot (key resistance): 2083

Support: 2044/2036

Next resistances: 2100 (weekly pivot)

Conclusion

Short-term bearish trend remains intact but the Index may see a minor rebound to occur first towards the 2076 short-term intermediate resistance with a maximum limit set at the 2083 daily short-term pivotal resistance before a potential push down to target the 2044/36 support zone.

However, a clearance above the 2083 short-term pivotal resistance is likely to negate the bearish tone to see a push up to test the 2100 weekly pivotal resistance. On a daily close above 2100 is likely to damage our preferred medium-term bearish view on the Index.

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