sp 500 short term technical outlook choppy movement again turn neutral between 2150 and 2133 1835982

Wed, 26 October 2016

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has broken below our predefined short-term pivotal support at 2145 which is largely triggered by mixed Q3 earnings results and forward guidance from key components stocks of the benchmark index.  On the negative side, 3M (MMM) and Caterpillar have lowered their respective forecasted future revenue flows citing a “challenging environments”.

Please click on this link for a recap on our previous short-term technical outlook.

Key elements

• Price action has failed to retake the 2150 level which has created a failure bullish breakout. The 2150 level also now coincides closely with the descending trendline resistance (depicted in dotted purple) that has capped prior advances since 08 September 2016 (see daily chart).
• Yesterday’s decline in price action has led the Index to rest just above the minor ascending trendline from 13 October 2016 low and the minor swing low areas of 19, 20 and 21 October 2016.
• The short-term hourly Stochastic oscillator is now coming close to its extreme oversold level which suggests limited potential downside at this juncture.

Key levels (1 to 3 days)

Supports: 2133 & 2124 (medium-term pivot)

Resistances: 2150 & 2174/80

Conclusion

Due to the current short-term choppy environment, we have decided to turn neutral for now between 2133 and 2150. Only a daily close back above 2150 is likely to revive the bullish tone to target  2174/80 in the first step.

On the other hand, a break below 2133 will see another slide to test this week’s medium-term pivotal support set at 2124.

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