sp 500 weekly outlook 09 nov to 13 nov potential final push up towards 21382160 resistance before ri

(Click to enlarge charts)

What happened last week

The U.S. SP 500 Index (proxy for the S&P 500) has continued to push higher within our expectation and printed a high of 2116 on 04 November 2015. Thereafter, it has pull-backed by 1.59% to hit a low of 2083 on 06 November 2015 on the back of a hawkish comment by Fed chairwoman, Yellen and the better than expected non-farm payrolls data for October that increases the chances of an interest rate hike in December by the U.S. Federal Reserve central bank.

Please click on this link for a review on our prior weekly outlook/strategy.

Key Economic Data Release/Events

• 12 Nov (Thurs) – Initial Jobless Claims for week ending Nov 6 @1330 GMT
• 12 Nov (Thurs) – Monthly Budget Statement for Oct @1900 GMT
• 13 Nov (Fri) – Retail Sales for Oct @1330 GMT
• 13 Nov (Fri) – Preliminary Reuters/Michigan Consumer Sentiment Index for Nov @ 1500 GMT

Key elements

• The Index is now coming close to its May/July 2015 all-time high range top at 2138 (a difference of 2.10% based on the current price of 2094 as at 09 November @4.40pm).
• The 2138 range top also confluences with the exit potential of the “Double Bottom” bullish breakout and a Fibonacci cluster at 2160 (2.00 Fibonacci projection from 26 August 2015 low @4am to 28 August 2015 high @8am projected from the 29 September 2015 low + from a lower degree, 29 September 2015 low to 06 October 2015 high @12am projected from 07 October 2015 low @4am) (see daily & 4 hour charts).
• Based on the confluence factor of technical elements, the 2138/2160 will be a significant resistance zone.
• The weekly (long-term) RSI oscillator that measures price momentum is coming close to its significant trendline resistance in place since 24 November 2013 which suggests limited upside potential. This observation suggests that the upside momentum of the rally from 29 September 2015 low may start to abate and the Index faces the risk of an imminent multi-week pull-back in price action (see weekly chart).
• The first medium-term support to watch will be at 2058 which is defined by the 200-day moving (in orange) and the former pull-back resistance (in dotted purple) that has broken now turns support. The next support rests at 2018 which is the upper limit of the pull-back zone of the “Double Bottom” bullish breakout (see daily & 4 hour charts).
• Based on the Elliot Wave Principal, the Index is likely in the midst of its final wave up to complete the bullish wave 3/ with key resistance at 2138/2160 before a corrective (bearish) wave 4/ unfolds for a potential multi-week down move (see 4 hour chart)

Key levels (1 to 3 weeks)

Intermediate resistance: 2138

Pivot (key resistance): 2160

Support: 2058 & 2018

Next resistance: 2230

Conclusion

After a rally of close to 12% from its 29 September 2015 low of 1871, current technical elements are not supportive of a direct rise of similar magnitude at this juncture.

The Index may see a final push up towards the intermediate range-top resistance at the 2138 with a maximum limit set at the 2160 weekly (medium-term) pivotal resistance before a potential multi-week pull-back unfolds to target 2058 before the 2018 support.

However, a clearance above the 2160 pivotal resistance is likely to invalidate the multi-week pull-back scenario for a further push up towards the next resistance at 2230 (the upper limit of the long-term bullish ascending channel in place since March 2009).

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