sp 500 daily outlook wed 15 june 2016 risk of further push up below 20982100 before potential drop 1

S&P 500 – Risk of further push up below 2098/2100 before potential drop

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By :  ,  Financial Analyst

S&P500 (4 hour)_15 Jun 2016

S&P500 (1 hour)_15 Jun 2016(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has tumbled as expected and hit the first downside target zone at 2064/2061 (printed a low of 2064) before it traded sideways throughout yesterday’s U.S. session. Please click on this link for a recap on our previous daily short-term technical outlook/strategy.

Today’s key economic even risk will be the U.S. central bank, Fed monetary policy meeting @1800GMT where it will be widely expected to keep the benchmark policy interest rate unchanged at 0.5%. Latest data as at 14 June 2016, the Fed Funds futures is only pricing in a 2% probability of an interest rate hike today with a probability of 21% chance of hike in the next Fed meeting on 24 July 2016.

The probability of the rate hike in July has been decreased significant from a probability of 46% from 4 weeks before the dismal Nonfarm payrolls data for May.

What are important in today’s meeting will be the Fed officials’ latest economic projections to gauge whether they are still keeping their prior projected at least two policy interest rate hikes before 2016 ends and also Chairwoman, Yellen press conference.

Key elements

  • Yesterday’s price action has hit a low of 2064 which is a near-term support derived by the Elliot Wave Principal and Fibonacci projection. These latest developments on price action suggest that the minor bearish impulsive down move, labelled v of 1 from 09 June 2016 high of 2121 is likely to have ended at 2064.
  • The current rebound is likely the minor corrective/snap-back rally to retrace the recent down move from 09 June 2016 high. Intermediate resistance to watch will be at 2085/91 (pull-back zone of the former minor range support) with the key short-term resistance at 2098/2100 as defined by the 13 June 2016 minor swing high and the descending trendline in place since 09 June 2016 high.
  • The aforementioned resistances of 2085/91 and 2098/2100 also confluences with the 50%/61.8% Fibonacci retracement of the recent down move from 09 June 2016 high to yesterday’s low of 2064.
  • The 4 hour Stochastic oscillator, a measure of price momentum still has some room left to see a further potential push up before reaching an extreme overbought region. These observations suggest that the on-going rebound still has some “legs’ to run.

Key levels (1 to 3 days)

Intermediate resistance: 2074

Pivot (key resistance): 2085

Supports: 2064 & 2058/54

Next resistance: 2098


Maintain bearish bias. The Index may see a further potential push up first towards 2085/91 with a maximum limit set at the 2098/2100 short-term pivotal resistance before another downleg to target the next support at 2058/54.

However, a clearance above the 2098/2100 short-term pivotal resistance is likely to invalidate the preferred bearish scenario to see another upward choppy movement to retest the 09 June 2016 swing high at 2121.


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