sp 500 still below 211021 medium term resistance 1817982016

Daily Outlook, Thurs 23 June 2016

(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has reacted below the 2100/105 short-term pivotal resistance and traded lower in yesterday’s U.S. session. However, it did not break below the 2083 potential downside trigger level (printed a low of 2084 towards the end of the U.S. session).

In this morning (23 June) Asian session, the Index has staged an opening gapped up of 9 points and continued its rally into the European session to print a current intraday high of 2110 (the medium-term pivotal resistance’s lower limit).

From last Thursday, 16 June low of 2049, the Index has already rallied by 2.9% as market participants continued to price an “optimistic” outcome that will see the “Remain” camp win in the U.K.’s EU referendum.

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

Key elements

• The on-going rally seen in the Index is now right below the 2110/21 medium-term pivotal resistance which is also the previous “bull trap” seen on 09 June 2016 (click here to recap our latest weekly technical outlook/strategy published on Monday, 20 June).
• The first near-term support remain at 2083 (potential downside trigger) which has been tested five times since last Thursday follow by the next support at 2065 (minor swing low of 17 June 2016).
• The daily (medium-term) RSI oscillator is now coming close to its descending trendline resistance that has managed to cap previous advance in price action of the Index since 04 April 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 2110/21

Supports: 2083 & 2065

Next resistance: 2138/44

Conclusion

Current pricing on the average for risk assets have appeared to take on extreme optimism given the magnitude on the rally seen across major stock indices and even in the FX space where the GBPUSD has busted past the 1.4800 level (it has rallied by more than 2 standard deviation from its 20-day moving average). All these observations suggests that risk assets may face the “buy the rumour, sell the fact” herding behaviour even the “Remain” camp wins.

Maintain bearish bias with lower conviction below the 2110/21 medium-term pivotal resistance as 2083 needs to be taken out in order to trigger a potential decline towards the next supports at 2065 and even 2054/49 (last Thursday, 16 June swing low area).

On the other hand, a clearance above the 2110/21 medium-term pivotal resistance is likely to invalidate the expected bearish scenario for a further push up to retest the current all-time/52-week high zone at 2138/44.

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