sp 500 start of another potential down move below 218594 resistance 1828722016

Daily Outlook, Tues 30 August 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, Tues 30 August 2016

S&P500 (daily)_30 Aug 2016

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

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has managed to stage a recovery yesterday (up 05%) after last Friday, 26 August weak closing due to Fed Chairwoman Yellen’s hawkish speech on Fed’s interest rate policy during the Jackson Hole conference.

However, technical elements are still not so rosy at the moment to advocate for a further up move at this juncture.

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

  • Apple (key component index stock) is likely to have a negative impact on the S&P 500 as EU commission has ordered Apple to pay EUR13bn in taxes after EU courts ruled that Ireland offered Apple with illegal tax breaks.
  • Case-Shiller Home Price Index (y/y) for June @1300GMT (5.1% y/y/ consensus)
  • Consumer Confidence for Aug  @1400GMT (97.0 consensus)

Key elements

  • Yesterday’s up move has lead the Index to hover just below the pull-back resistance of the former bearish “Ascending Wedge” breakdown now at 2185 which also confluences with the 76.4% Fibonacci retracement of the recent down move from 23 August 2016 high to last Friday, 26 August low of 2160.
  • In conjunction, the daily (medium-term) RSI is right at its pull-back resistances which suggests that the upside momentum of yesterday’s up move is now being capped. Thus, price action of the Index is now showing limited upside potential at this juncture.
  • Based on the Elliot Wave Principal and fractal analysis, the Index is likely undergoing the minor degree down move wave c to complete the intermediate degree (higher time frame) corrective decline wave 4/ with potential projected end targets at 2155 and 2134 (click here for the details as per highlighted in our latest weekly technical outlook/strategy published yesterday).
  • The aforementioned 2155 projected target also confluences with the medium-term swing low area of 02 August 2016

Key levels (1 to 3 days)

Intermediate resistance: 2185

Pivot (key resistance): 2194 (medium-term)

Supports: 2168 & 2155

Next resistance: 2222


Maintain bearish bias. As long as the medium-term pivotal resistance at 2194 is not surpassed, the Index is likely to shape another potential downleg to target the next supports at t2168 and 2155 in the first step.

On the other hand, a clear break (daily close) above the 2194 medium-term pivotal resistance is likely to invalidate our preferred bearish scenario to see the start of another impulsive bullish up move towards the next resistance at 2222.


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