sp 500 further potential upside above 218480 support 1826862016

Daily Outlook, Tuesday 16 August 2016

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has continued to rally within our expectation and recorded another all-time high daily close at 2090. It has also hit our short-term target/resistance at 2194 as per defined in our previous daily technical outlook/strategy published last Friday, 12 August 2016 (click here for a recap).

Today key U.S. economic data/releases as follow:

• Housing Starts (m/m) for Jul @1230 GMT (1.180M consensus)
• Consumer Price Index Ex Food & Energy for Jul @1230GMT (0.2% m/m & 2.3% y/y consensus)
• Industrial Production for Jul @1315GMT (0.3% m/m consensus)
• Capacity Utilization for Jul @1315GMT (75.6% consensus)

Key elements

• The Index has continued to evolve within a short-term bullish ascending channel in place since 03 August 2016 low (the mini “bear trap’) with the current price action that is now testing its lower boundary at 2184 and also the 23.6% Fibonacci retracement of the on-going rally from 03 August 2016 low to yesterday’s high. Below 2184 lies another support at 2180 which is defined by the lower limit of a minor congestion zone (see 1 hour chart).
• The next significant short-term resistance stands at 2200 which is defined by a Fibonacci cluster.
• The upper boundary of the earlier mentioned bullish ascending stands at 2209/2212 which is also a Fibonacci cluster.
• Based on the Elliot Wave Principal and fractal analysis, the current rally from 11 August 2016 low of 2172 is likely undergoing the final wave 5 of a minor degree to complete the higher intermediate degree bullish impulsive wave 5/ in place since 03 August 2016 low with a potential end target set at 2258/68. These observations suggest that a deeper correction is unlikely to occur at this juncture. Please click here for more details as per highlighted in our latest weekly technical outlook/strategy published yesterday.
• The hourly Stochastic oscillator has exited from its oversold region and continues to inch upwards towards its extreme overbought level. This observation suggests that upside momentum of price action has started to resurface at least in the short-term after a minor pull-back from yesterday high that has occurred in today’s European session.

Key levels (1 to 3 days)

Intermediate support: 2184

Pivot (key support): 2180

Resistances: 2200 & 2209/2212

Next support: 2159/55

Conclusion

Maintain bullish stance to see a potential new record high. As long as the 2180 daily short-term pivotal support holds, the Index is likely to shape another potential upleg to target the next resistance sat 2200 and even 2209/2212 in the first step.

However, a break below the 2180 short-term pivotal support may invalidate the preferred bullish scenario to open up scope for a deeper pull-back/consolidation towards this week’s medium-term pivotal support zone of 2159/55.

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.