sp 500 potential rebound in progress above 1995 1819072016

Daily Outlook, Tues 28 June 2016

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has played catch-up with the rest of the major benchmark stock indices as it breached last Friday, 24 June 2016 low of 2007 to print new low of 1991 in yesterday’s U.S. session. But overall decline from the pre-Brexit high of 2127 (bull trap) to yesterday low is only 6.4% which is still showing outperformance against its European peers (DAX, FTSE 100) which  recorded a decline between 11% to 13%.

Interestingly, yesterday’s plunge challenged the lower limit of the predefined medium-term pivotal support of 2005/1995 but it did not have a daily close above it. These observations suggest that our latest preferred medium-term bullish bias for a potential post Brexit rebound remains intact.

Click here for more details as per highlighted in our latest weekly technical outlook/strategy published yesterday.

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

• Final GDP for Q1 @1230GMT
• S&P/Case-Shiller Home Prices (y/y) for Apr @1300GMT (5.4% estimate)
• Consumer Confidence for June @1400GMT (93.3 estimate)

Key elements

• Yesterday’s decline has lead the price action of the Index to rest right on its 2005/1995 key medium-term support set for this week as per defined by a confluences of elements (refer to our latest weekly technical outlook for details).
• In conjunction, the daily (medium-term) RSI oscillator has started to inch up from its oversold region which suggests limited downside momentum of price action at this juncture.
• On the shorter-term, a latest positive development occurred as the Index has broken out of a bullish “Descending Wedge” configuration (as depicted in dotted purple) which represent downside exhaustion (see 1 hour chart).
• The near-term resistances stand at 2030 and 2057/63 (the minor swing high of 24 June 2016 @9pm and close to 50% Fibonacci retracement of the decline from 24 June 2016 high of 2127 to yesterday’s U.S. session low).

Key levels (1 to 3 days)

Intermediate support: 2006

Pivot (key support): 1995/91

Resistances: 2030 & 2057/63

Next support: 1947/30

Conclusion

Potential short-term rebound in progress. As long as the 1995/91 pivotal support holds, the Index is likely to shape a further potential push up to target 2030 before 2057/63 in the first step.

On the other hand, failure to hold above the 1995/91 pivotal support may invalidated the preferred medium-term bullish bias to open up scope for a deeper decline towards the next significant support at 1947/30 (long-term ascending channel’s support in place since March 2009 low).

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