sp 500 daily outlook tues 25 aug potential push up in progress above 19221890 support 1118092015

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has plummeted again drastically and hit a low of 1835 (down by 14% from the current all-time high of 2138 seen May 2015).

Interestingly, the Index has a daily close above the key long-term support at 1890 (for more details, please click on this link as per highlighted in our latest weekly outlook).

Key elements

• Yesterday’s price action has formed a daily “Long-legged” candlestick pattern above 1890 key support which suggests that the bears are getting indecisive to push the Index lower (see daily chart).
• The intermediate term Stochastic oscillator has started to inch up from its extreme oversold level which suggests that upside momentum has resurfaced after a period of steep decline seen last week (see daily chart).
• The intermediate resistance to watch will be at 1980/2000 (50% Fibonacci retracement of the recent steep decline from 20 July 2015 high to the current 24 August 2015 low & the former support congestion zone from 16 December 2014 to 02 February 2015 (see daily chart).
• The hourly Stochastic oscillator is coming close to its extreme overbought level which suggests the Index may see a pull-back soon in the price action of the Index (see 1 hour chart)

Key levels

Intermediate support: 1922

Pivot (key support): 1890

Resistance: 1980 & 2000

Next support: 1835

Conclusion

Technical elements are advocating for a further potential push up towards 1980 and even 2000. Any potential pull-back is likely to be held by the intermediate support at 1922 with a maximum limit set at the 1890 daily pivotal support.

On the other hand, a break below the 1890 pivotal support is likely to negate the bearish tone for another spike down to retest yesterday’s low at 1835.

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