sp 500 daily outlook wed 27 apr 2016 risk of a decline below 2100 1808672016

(Click to enlarge charts)

What happened yesterday/earlier

The U.S. SP 500 Index (proxy for the S&P 500 futures) has traded sideways below the predefined 2100 intermediate resistance. Today’s key economic event will be the Fed meeting @1830GMT, click over here for a specific related Fed article.

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

Key elements

• Despite yesterday’s sideways price action seen in the U.S. SP 500 Index, the more “growth” related U.S Tech 100 (proxy for the Nasdaq 100 futures) has underperformed as it broke below the 22 April 2016 minor swing low of 4438 (largely driven by Apple’s dismal performance which has a biggest weightage of 11% in the Nasdaq 100). Price action of the U.S Tech 100 has evolved into a short-term downtrend.
• The U.S. SP 500 Index remains capped below the 2100 resistance which is defined by the by a minor descending trendline from 21 April 2016 high and also coincides closely with the 61.8% Fibonacci retracement of the recent decline seen from 21 April 2016 high of 2111 to 25 February 2016 low.
• The next short-term support rests at 2065 which is defined by the minor swing low area of 18 April 2016 that also coincides closely with the earlier congestion area (the pink boxes) of the former descending range from 07 April to 11 April 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 2100

Supports: 2077, 2065 & 2036

Next resistances: 2110 (weekly pivot)

Conclusion

Bearish bias remains intact and given the underperformance of the Nasdaq 100, we have tightened the short-term daily pivotal resistance to 2100 on the U.S. SP 500 Index for a potential decline to 2077 before the 2065 support. Only a break below 2065 may trigger a deeper slide to test the 2036 support (the swing low area of 8/12 April 2016 and the 23.6% Fibonacci retracement of the whole up move from 11 February 2016 to last week high of 2111).

However, a break above 2100 pivotal resistance is likely to invalidate the bearish expectation to see a choppy price action to retest the recent high of 2110.

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