sp 500 daily outlook wed 06 jan 2016 still above 1994 key medium term support 1791962016

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has inched lower but managed to hold above the key 1994 medium-term support as the market continued to churn within a sideways environment.

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

Key elements

• In today’s European session, the Index has tried another attempt to test the key medium-term support at 1994.
• Interestingly, the hourly (short-term) RSI oscillator is still holding above its supports and traced out a bullish divergence signal. These observations suggest the strength of the current downside momentum has started to abate.
• Graphically, the Index has traced out a short-term impending bullish “Double Bottom” chart configuration which suggests a potential bullish reversal is round the corner after two days of decline.
• The intermediate resistance now stands at 2023 which is the minor swing high formed yesterday, 05 January 2015.

Key levels (1 to 3 days)

Pivot (key support): 1994 (medium-term)

Resistance: 2023 & 2046

Next support: 1960

Conclusion

As long as the 1994 key medium-term pivotal support holds, the Index is likely to see a push up to retest the minor swing high at 2023 in the first instance. Only a break above 2023 may trigger a further upside movement towards the next resistance at 2046 (61.8% Fibonacci retracement of the downmove from 30 December 2015 to 5 January 2016 low of 1989).

However, failure to hold above the key 1994 pivotal support is likely to invalidate the push up scenario for a further plunge towards the next support at 1960.

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.