sp 500 daily outlook wed 20 apr 2016 potential exhaustion signs emerge at 2100 resistance 1807262016

(Click to enlarge charts)

What happened yesterday/earlier

The recent rally seen in the  U.S. SP 500 Index (proxy for the S&P 500 futures) has managed to stall at the predefined critical resistance of 2105 (printed a high of 2105 before it retreated for a daily close of 2097). Please click on this link for a recap on our previous short-term daily outlook/strategy.

Interestingly, it has started to show exhaustion signs in terms of price action at the 2100 resistance. More details as per highlighted below.

Key elements

• The daily charts of all the major cash indices (S&P 500, Nasdaq 100 & Russell 200) has shown a bearish candlestick pattern right at/below their respective resistances. These observation suggests a potential upside exhaustion in terms of price action after the relentless rally (+16%) seen from the 11 February 2011 low (please refer to the first three attached charts).
• The above mentioned observations that occur right at the 2100 resistance for the U.S. SP 500 Index are not goods signs for the bulls. We also mentioned yesterday in our daily outlook/strategy that the 2100 resistance is significant due a confluence of elements from graphical, fractals, Elliot Wave and momentum indicator), thus the appearance of bearish candle stick patterns across of all the major U.S. indices increases the probability of  a pull-back at least for the U.S. SP 500 Index.
• The near-term supports stands at 2087 which is last Friday, 15 April 2016 former minor swing high follow by 18 April 2016 swing low area of 2065 that also coincides closely with the earlier congestion area (the pink boxes) of the descending range from 07 April to 11 April 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 2100/105

Supports: 2087 & 2065

Next resistances: 2120 & 2138

Conclusion

As long as the 2100/105 pivotal resistance is not surpassed, the Index now faces the risk of a short-term decline and a break below the 2087 support is likely to add impetus for the potential down move to target the 2065 support.

Alternatively, a break above the 2100/105 pivotal resistance is likely to invalidate the bearish push down scenario to see the continuation of the rally towards 2120 and even the 52-week week/current all-time high at 2138.

Charts are from City Index Advantage Trader Pro & eSignal

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.