sp 500 daily outlook fri 08 apr 2016 potential corrective push up in progress within medium term bea

(Click to enlarge charts)

What happened yesterday/earlier

The U.S. SP 500 Index (proxy for the S&P 500 futures) has tumbled as expected below the 2069 short-term pivotal resistance and met expected target at 2042 and even almost met the next support at 2030 (printed a low of 2033 in the late U.S. session).

Please click on this link for a recap on our previous daily short-term outlook/strategy.

Key elements

• After hitting a low of 2033, the Index has staged a rebound of 1.08% within a bearish descending channel configuration.
• The upper boundary of the bearish descending channel stands at 2060 which also confluences with the 76.4% Fibonacci retracement of yesterday’s decline from 07 April 2016 high of 2069 to yesterday’s low of 2033.
• In terms of fractal analysis, a push up from yesterday’s low of 2033 to the top of the descending channel at 2060 is similar in terms of magnitude and shape (see the dotted brown lines on 1 hour chart).
• The 4 hour (short-term) Stochastic oscillator is still oriented to the upside and still has some room left for further potential upside before reaching its extreme overbought level. This observation suggests that the current rebound in price action from 2033 low has not run its course and still has room for further potential upside.

Key levels (1 to 3 days)

Pivot (key support): 2042

Resistance: 2060

Next support: 2030/22

Conclusion

The medium-term (multi-week) configuration remains bearish for the Index. However on the shorter-term (intraday), technical elements have turned positive for a “residual push up” .Any potential pull-back is likely to be held by the daily short-term pivotal support for further push up to target the 2060 resistance (top of descending channel + 76.4% Fibonacci retracement).

On the flipside, a break below the 2042 short-term pivotal support is likely to invalidate the push up scenario to see the continuation  of the medium-term bearish movement to target the next support at 2030/22 (swing lows area of 17/24 March 2016 + 1.00/1.236 Fibonacci projection) in the first step.

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