sp 500 daily outlook thurs 11 feb 2016 in a precarious situation watch the key support at 1811 17968

(Click to enlarge charts)

What happened earlier

The U.S. SP 500 Index (proxy for the S&P 500 futures) has push up to test the neckline pull-back resistance of the “Head & Shoulders” bearish breakout at 1880 before it staged a bearish reversal of 2.3% to hit a low of 1837 in today’s Asian session.

Key elements

• The Index has continued to trade within a short-term bearish descending channel in place since 02 February 2016 high with its upper boundary (resistance) now at 1860 (see 1 hour chart).
• The lower boundary of the descending channel now rests at 1811 which also confluences with the neckline support of a mega long-term bearish “Double Top” configuration in place since October 2014 , Fibonacci projection and the exit target of the recent short-term bearish “Head & Shoulders” bearish breakout.  Please click on this link for more details as per highlighted in our latest weekly outlook/strategy.
• The hourly (short-term) Stochastic oscillator has exited from its oversold region and still has room for further upside potential before reaching its extreme overbought level. This observation suggests a potential relief rebound at this juncture to test the 1851 intermediate pull-back resistance of the former trendline support from this Tuesday, 09 February 2016 low.

Key levels (1 to 3 days)

Intermediate resistance: 1851

Pivot (key resistance): 1860

Supports: 1811 & 1790

Next resistance: 1880

Conclusion

The Index is now in a precarious situation and technical elements continue to deteriorate. Any potential short-term relief rebound is likely to be capped by the 1851 intermediate resistance with a maximum limit set at the 1860 short-term pivotal resistance before another push down occurs to test the 1811 critical support. A break (likely) below the 1811 support opens up scope for more downside pressure to target the next support at 1790 in the first step.

On the other hand, a clearance above the 1860 pivotal resistance may put the bears on hold to see a further relief rebound to retest the pull-back resistance of the “Head & Shoulders” bearish breakout at 1880.

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