sp 500 short term setback invalidated bullish tone remains intact above 2061 1819512016

Daily Outlook, Thurs 29 June 2016 (Click to enlarge chart) What happened earlier/yesterday The U.S. SP 500 Index (proxy for the S&P 500 futures) has […]

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By :  ,  Financial Analyst

Daily Outlook, Thurs 29 June 2016

S&P500 (daily)_30 Jun 2016

S&P500 (1 hour)_30 Jun 2016(Click to enlarge chart)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has continued its relentless climb and broke above the predefined short-term upside target/resistance at 2057/63 which invalidated our preferred short-term pull-back/consolidation highlighted in our yesterday’s short-term technical outlook/strategy.

From its post Brexit low of 1991 seen on this Monday’s U.S. session 27 June, the Index has rallied by 4.6% to yesterday, closing U.S. session high of 2083 (close to our expected medium-term target/resistance of 2084 set for this week).

Please click here to recap our prior short-term daily technical outlook/strategy.

Today key U.S. economic data releases as follow:

  • Initial Jobless Claims for the week ended 24 June @1230GMT (267K estimate)
  • Chicago Purchasing Managers’ Index for Jun @1345GMT (50.7 estimate)

Key elements

  • From this week low of 1991 seen on Monday to yesterday’s U.S. session high of 2083, the Index has recorded a current best weekly gain till yesterday seen in the current three month rally from the 11 February 2016 low.
  • Taking into account of the aforementioned element and based on the Elliot Wave Principal/fractal analysis, this Monday, 27 June low of 1991 can be considered as an intermediate term low of a wave (2) and the current on-going rally looks impulsive to be a considered as a 1/. If based on such wave count/fractal possibilities, we may be seeing a new record high soon as last week’s sudden shock triggered by Brexit is considered as a capitulation (click link to recap such details mentioned in our weekly technical outlook/strategy published this Monday). However, we need to wait for a weekly close to have a make a better judgement on the wave structure.
  • On the shorter-term, the bullish trend from this Monday low remains intact with the key short-term support now at 2061 defined by the former minor swing high area of 24 June 2016, the ascending trendline from Monday, 27 June low and the 23.6% Fibonacci retracement of the  rally from this Monday low to yesterday U.S. session high of 2083.
  • The daily RSI oscillator remains positive and still has room to manoeuvre to the upside (as depicted by the blue box) before hitting is its resistance and overbought region. These observations suggest that upside momentum remains intact.
  • The near-term significant resistance to watch will be at 2100/105 (the “bull trap” seen on 24 June 2016 and also the descending trendline that has capped prior advances in place since its current all-time high of 2138 seen in May 2015).

Key levels (1 to 3 days)

Pivot (key support): 2061

Resistances: 2084 & 2100/105

Next support: 2027


Turn bullish as short-term pull-back/consolidation scenario invalidated. We have set a tight short-term pivotal support at 2061 for a potential further upside movement to target 2084 before 2100/105.

On the other hand, failure to hold above the 2061 pivotal support is likely to invalidate our preferred direct rise scenario for a deeper pull-back towards the next support at 2027 (minor congestion area and the 61.8% Fibonacci retracement of the rally from this Monday U.S. session low to yesterday high of 2083).


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