S&P500: The Long & Short Of It | SPX, SYS, ORLY, EBAY, TXN
Matt Simpson October 31, 2019 3:36 AM
The S&P500 closed to new highs following yesterday’s Fed meeting, supported by higher earnings whilst also taking comfort from Powell’s comments that a hike is unlikely. Technically, it rests on the pivotal level of 3028, yet resistance nearby awaits. A break above the Jan 2018 resistance level assume bullish trend continuation, whereas a break back beneath 3028 warns of a bull-trap and deeper correction.
Flicking through equities for the S&P500 showed greater potential for short setups than longs. Perhaps that’s a bad omen for new highs on S&P500, although part of the reason many longs were rejected were because they were either too close to earnings or overextended without any signs of a pullback.
Sysco Corp CFD/DFT: Trading just off its all-time highs, prices have had a chance to consolidate below 80 which has provided adequate mean reversion for a potential long setup. The recent higher low has respected the 20-day average and it appears that prices could just as easily break higher as it could produce another higher low to form a potential ascending triangle.
Keep I mind that earnings are on the 4th November, where a notable earnings miss could topple this from its highs. Hopefully though, they’ll be supportive of this compelling setup.
O'Reilly Automotive Inc CFD/DFT: Positive earnings saw this explode higher out of an ascending triangle and found resistance around the monthly R3 pivot (not pictured for a cleaner chart). A hammer at the highs showed prices were exhausted and now a retracement is underway. This may be a little premature for the watchlist, but it’s worthy keeping an eye on none the less given the strength of the breakout.
With little in the way of support above 410-415, traders can see if prices stabilise around a Fibonacci level. If satisfied a higher low has formed, a volatility such as ATR can be used to calculate the ‘invalidation point’ of the bullish bias. Bullish swing traders could then look to enter, or for a more conservative approach, wait for signs bullish momentum has returned to provide greater confidence the low is in.
Ebay CFD/DFT: Long known for its discounts, Ebay’s stock price also found itself on sale following poor earnings last week. Thursday’s large gap lower saw it plummet through the 200-day eMA and now prices are clinging onto key support around $35. The fact it has failed to provide any meaningful rally despite the S&P500 hitting new highs is telling, as is the declining volume during this week’s lacklustre ‘rebound’.
- Bias is for a break to new lows and for prices to target the upside gap around 32.33.
- Bears can either wait for a break below 35.00/35.19, or fade into rallies below 37.23.
- If the trend takes off then bears could look to ‘close’ the gap around 31 and take it south.
- A break above 37.23 places it onto the backburner, although it still leaves potential for a large rounding top pattern to develop over the coming weeks if it remains below 39.35
Texas Instruments CFD/DFT: The gap lower last week took prices straight down to the bullish trendline and 200-day eMA. So, we’re at another juncture where bulls either save the day and keep prices above these levels, or the dead cat has bounced and we’re waiting for a break lower.
Given the magnitude of the gap from its highs (a breakaway gap) and that the pullback from the trendline has found resistance below the 100-day average, the bias is for a break lower.
- Bias remains bearish below 122.10
- Bears can wait for a break below the 200-eMA and bullish trendline. A more cautious approach is to wait for a break beneath 115.87.
- A break above 122.10 also breaks the 100-day eMA. Bulls could look to close the gap towards 128.23, although 126.63 could provide interim resistance.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.