Market News & Analysis

S&P 500 – Further potential upside above 2265/58 support

Short-term Technical Outlook (Fri, 06 Jan 2016)

sp500-1-hour_06-jan-2017(Click to enlarge charts)

What happened earlier/yesterday

The U.S. SP 500 Index (proxy for the S&P 500 futures) has managed to shrug off its initial weakness (down by 0.4%) in the first half on the U.S. session triggered by a weaker than expected ADP employment – a prelude to nonfarm payrolls for December 2016 where it has shown to have added 153K jobs versus a market expectation of 170K.

However, the Index has managed to stage a recovery and close its U.S. session at an intraday high of 2271 where it has maintained its bullish bias since the start of the week. Please click on this link for a recap on our latest weekly technical outlook/strategy published on this Monday, 02 January 2017.

Today’s key U.S economic data release/events

  • Nonfarm payrolls for Dec @1330GMT  -  178K consensus
  • Factory Orders for Nov @1500GMT – -2.2% m/m consensus
  • Fed’s Evans speech @1715GMT

Key elements

  • Yesterday’s decline in price action has managed to stall right above its key short-term support at 2258 defined by a confluence of elements (the lower boundary of a short-term ascending channel in place since 31 Dec2016 low, the minor swing high area of 03 January 2017 & the 50% Fibonacci retracement of the recent up move from 04 January 2017 minor swing low to 05 January 2017 high of 2273.
  • Based on the Elliot Wave Principal and fractal analysis, yesterday’s decline can be considered as the corrective minute degree corrective wave iv and the Index now is likely to shape the minor degree bullish impulsive wave 5.
  • The hourly Stochastic oscillator has also dipped down and it is now hovering just above an extreme oversold level. This observations reinforce the a potential bullish price action reversal at this juncture.

Key levels (1 to 3 days)

Intermediate support: 2265

Pivot (key support): 2258

Resistances: 2278 (current all-time high), 2285 & 2303

Next support: 2232

Conclusion

As long as the 2258 short-term pivotal support holds, the Index is likely to shape another potential upleg to retest 2278 before target the next resistances at 2285 follow by 2303 next.

On the other hand, a break below 2258 may negate the preferred bullish scenario to see a deeper decline towards the next support at 2232 (31 Dec 2016 swing low area).

Charts are from City Index Advantage TraderPro

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