sp 500 daily outlook fri 09 oct potential short term final push up above 20101996 support 1525472015

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) has managed to stage a late rally in the final hour of the U.S. session and broke above the 2007 weekly pivotal resistance.

Due to inter-market relationships, we have warned earlier on Wednesday that the conviction of a medium-term (1 to 3 weeks) “last push down” scenario for the S&P 500 has turned low even though it has remained below the 2007 level. Yesterday’s price action has been the deciding factor for the bullish camp.

Please click on this link for a recap on our previous daily outlook.

Key elements

• Price action has broken above the 2007 weekly pivotal resistance which has prevented an earlier advance seen on 17 September 2015.  In addition, it is considered as a bullish breakout of a “Double Bottom” chart pattern in place since the “Black Monday” 24 August 2015 low.
• The daily (medium-term) RSI oscillator has just broken above its former “stubborn” resistance in place since late March 2015 which suggests that upside momentum has resurface. This observation gives credence for a further potential rally in price action.
• On the shorter-term, the Index appears to be evolving within an ascending channel (in orange) in place since 02 October 2015 low with its lower limit (support) and upper limit (resistance) at 1996 and 2040/2050 respectively.
• The 2040/2050 resistance also confluences with a “bunch” of former supports, 200-day MA (as depicted on the daily chart) and the 0.618 Fibonacci projection from the 29 September 2015 low @2pm to 08 October 2015 low @3pm (a typical bullish impulsive 5^th wave price target based on the Elliot Wave Principal).

Key levels (1 to 3 days)

Intermediate support: 2010

Pivot (key support): 1996

Resistance: 2040/2050

Next support: 1960/1948

Conclusion

As long as the 1996 daily (short-term) pivotal support holds, the Index may see a final short-term push up to target the 2040/2050 before the Index see a significant retracement occurs for the current uptrend seen from 29 September 2015 low (the Index has rallied by 7% so far).

On the other hand, failure to hold above the 1996 pivotal support is likely to damage the current uptrend to see a deep slide towards the 1960/1948 support zone (former resistance area on two occasions during 23 September and 25 September 2015)

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