sp 500 signs of bottoming for potential final upleg of melt up phase with nasdaq 100 leading 1830582

Daily Outlook, Fri 16 September 2016

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has indeed shaped the expected push up around the 2123 predefined intermediate support as per highlighted in our previous short-term daily technical outlook/strategy (click here for a recap).

Yesterday’s price action of the S&P 500 in parallel with the latest movement (details as per discussed below )of the higher beta benchmark Nasdaq 100 has increased the probability of our preferred final upleg of the melt-up phase that we have been stressing in our longer-term outlook (click here for a recap).

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

• Consumer Price Index ex food & energy for Aug @1230 GMT (2.2% y/y consensus)

Key elements

• The Index has started to form a minor impending “Double Bottom” formation just above the medium-term 2110/100 pull-back pivotal support (see 1 hour chart).
• The key short-term support now rests at the 2129/2120 zone which is defined by the ascending trendline of the minor ‘Double Bottom” formation. The neckline resistance of the ‘Double Bottom” stands at 2164 which also confluences with the pull-back resistance of the former minor swing lows area of 03 August/01 September 2016.
• The next resistances stand at 2194 which is current intermediate range top/all-time high follow by 2205 which is defined by the exit potential of the impending “Double Bottom” bullish breakout and the 1.618 Fibonacci projection from the 12 September 2016 swing low  (see 1 hour chart).
• Since the recent rebound from 12 September 2016 low, the “growth oriented” benchmark Nasdaq 100 has been leading as it has rallied by 3.51% compared to only a gain of 1.22% recorded in the S&P 500. Interestingly, the Nasdaq 100 is now probing the previous all-time high of 4816 printed during the dot.com mania seen in 2000. Also, its current price action has formed an impending weekly “Bullish Engulfing” candlestick pattern. If today’s price action of the Nasdaq 100 is able to maintain the current positive momentum and ended the week with a close above 4839, it implies that the bearish sentiment triggered by last Friday’s sell-off has been wiped out. These observations are positive for the U.S. stock market as we are now seeing a rebound that is being led by growth oriented/high-beta stocks (Nasdaq 100) (refer to the last two charts).

Key levels (1 to 3 days)

Pivot (key support): 2129/20

Resistances: 2164, 2194 & 2205

Next support: 2110/100 (medium-term pivot)

Conclusion

Maintain bullish bias with a tighten short-term pivotal support at 2129/20 for a further potential push up to retest the near-term resistance at 2164 and a break above it is likely to add impetus for our preferred final upleg scenario to target the next resistances at 2194 and 2205 in the first step.

However, a break below the 2120 short-term pivotal support is likely to negate the preferred bullish scenario for another round of choppy decline to retest the key 2110/100 medium-term pivotal support.

Charts are from City Index Advantage TraderPro & eSignal

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