sp 500 daily outlook tues 10 may 2016 watch the near term support at 2074 potential downside trigger

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has continued to push and stage a test on the current weekly medium-term pivotal resistance at 2080/83 (printed a high of 2085) without have a clear break above it.

Yesterday’s push up in price action has recorded a cumulative gain of 2.4% from last Friday, 06 May 2016 low of 2036 which is the largest rally in terms of magnitude since the on-going decline that started from 21 April 2016 high of 2111. Please click on this link for a recap on our previous daily short-term outlook/strategy. Today, there are no key U.S. economic data release.

Key elements

• Yesterday’s rally has managed to stall a short-term descending trendline from 21 April 2016 high which confluences with the current weekly pivotal resistance of 2080/83. Please click link to recap our latest weekly outlook/strategy published yesterday.
•  The daily (medium-term) RSI oscillator has not shaped any bullish divergence and still remains below its resistances. These observations suggest that medium-term downside momentum of price action remains intact (see daily chart).
• On the short-term, there is an ascending trendline from last Friday low that is acting as a support at 2074 which is also the former minor swing high of 10 May 2016 @4pm.
• The next short-term support rests at 2054 which is the congested minor swing lows area of 09/10 May 2016 which also coincides closely with the 61.8% Fibonacci retracement of the current push up from last Friday, 06 May 2016 low to yesterday high of 2085.

Key levels (1 to 3 days)

Pivot (key resistance): 2080/83

Supports: 2074, 2054 & 2039

Next resistance: 2100

Conclusion

Medium-term bearish trend remains intact as the 2080/83 pivotal resistance has not been broken to the upside. Right now, a break below the short-term support at 2074 is likely to trigger a potential direct drop towards the next support at 2054 in the first step.

Only a clearance above (daily close) 2080/83 should put the bears on hold for a further squeeze up to retest the significant resistance at 2100 (descending trendline from the 17 May 2015 high that has capped the current advance from 11 February 2016 low).

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