Short-term technical outlook on S&P 500 (Fri, 28 Jul 2017)
What happened earlier/yesterday
The S&P 500 Index (proxy for the S&P 500 futures) had shaped an initial intraday decline of 0.96% to print a low of 2460 in yesterday’s (27 July) U.S. session from its fresh all-time high of 2484 printed in the opening hour before it recouped some losses to end U.S. session at 2475.
For a recap, we had highlighted in our weekly technical outlook report published earlier on Monday, 24 July 2017 that current medium-term uptrend for the S&P 500 in place since 13 April 2017 low exhibited risks of a multi-week corrective decline and yesterday’s price movement had increased this probability (click here to recap the details). Below will be highlighted key short-term elements.
Key elements
- The recent all-time high of 2483 seen on the Index on 27 July is being seen by a confluence of Fibonacci projection cluster zone of 2478/80 derived from different price swing low areas. Based on the Elliot Wave Principal and fractal analysis approach, the Index is likely to have completed a 5 wave bullish impulsive movement of a minor degree from 17 April 2017 low of 2326 of an intermediate degree bullish impulsive wave 3/ in place since 03 November 2016 low (labelled as i, ii, iii, iv & v). Thus, it now faces a risk of at least a short-term corrective decline to retrace the recent rally from 17 April 2017 low (see 4 hour & 1 hour charts).
- From momentum analysis approach, the 4 hour Stochastic oscillator has traced out a bearish divergence signal at its overbought region and still has further room to manoeuvre to the downside before it reaches an extreme oversold level. These observation suggest that the recent upside momentum of price action seen from 20 July 2017 has started to wane which also highlights the risk of a short-term corrective decline.
- From a graphical analysis approach, the Index has staged a bearish breakdown below a minor ascending channel support in place since 07 July 2017 swing low area (see 1 hour chart).
- From a relative strength analysis across key U.S. stock market benchmark indices, the growth oriented Nasdaq 100 and Russell 2000 had started to shape a minor marginal lower high versus a fresh new all-time high seen in the Dow Jones Industrial Average based on yesterday’ price actions. These observations suggest the market sentiment has turned negative towards growth oriented stocks which may not bode well for the overall U.S. stock market at least in the short-term (see last chart).
- The next significant support rests at the 2450/45 zone which is defined by the former minor swing high areas of 26/29 June 2017 and the 50% Fibonacci retracement of the recent rally from 07 July 2017 low to 27 July 2017 high (see 1 hour chart).
Key Levels (1 to 3 days)
Intermediate resistance: 2476
Pivot (key resistance): 2483
Support: 2450/45
Next resistance: 2495
Conclusion
As long as the 2483 short-term pivotal resistance is not surpassed, the Index may shape a potential corrective decline to target a near-term support at 2450/45 in the first step.
On the other hand, a clearance above 2483 is likely to open up scope to see a further up move towards a new all-time high at 2495 (0.7614 Fibonacci projection from the length of wave i to iii projected from the low of wave iv at 2405 – see 4 hour chart).
Charts are from City Index Advantage TraderPro & eSignal
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