Analysis: A Position in the S&P 500 for 'Just in Case'
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We have written almost ad nauseum over the past few weeks of the cyclical importance of the first half of August for the US equity market. During this time, according to our methodology, the market is more prone to a shift in trend. So far the broader turn window has been rather uneventful with the index trapped between the Gann levels at 1710 and 1672. However, such ‘boring’ consolidations many times can be part of a broader topping process. With the cyclical turn window coming to an end over the next few days we would like to have a downside entry order in place ‘just in case’ a top is triggered. The 1672 Gann levels looks absolutely critical from both a price and time perspective and any weakness below on a closing basis should set off a much more important move lower in stocks. As such we like selling the SPX on a move below 1672 over the next week or so.
S&P 500 Daily Chart: August 14, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
LEVELS TO WATCH
Resistance: 1700 (Psychological), 1710 (Gann)
Support: 1680 (Fibonacci), 1672(Gann)
STRATEGY – Sell SPX on a 1670 stop
Entry: Sell SPX on a 1670 Stop
Stop: 1-day close above 1710
Target 1: 1600
Target 2: 1565
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.