S&P 500: Short-term Trend Lower, Broader Scenario Still Developing
- Week started out with a whimper
- Focus is on short-term downward trend structure
- Broader picture still unclear, a couple of possibilities could be taking shape
Yesterday, the week started off on very quiet note, with no major catalyst to stir up volatility and market participants seemingly having taken an extended weekend. The S&P 500 continues to be broadly range-bound, but working its way lower within descending constraints.
The technical picture and bias hasn’t changed since yesterday. To recap: The trend is lower, but in a choppy fashion. It is making for difficult conditions when looking for discernable moves outside of a few days, but does provide the short-term trader (1-3 days) with some looks, if patient.
A pair of upper parallels off the 5/10 and 4/20 peaks are keeping price contained on the upside (~2057/2065), while helping to maintain the integrity of the downward sloping trend. We will continue to focus on trades in the current path of least resistance (short) barring a strong move through overhead sloping and horizontal levels.
Looking at the market from a higher altitude: The channel off the 4/20 peak remains, while our recently discussed ‘head-and-shoulders’ top is beginning to take more of the shape of either a descending wedge, which could hold the same bearish fate as the H&S formation, or a bull-flag which would ultimately lead to higher prices. The third possibility of further chop with no clear outcome is still quite possible given the current environment.
SPX500 Daily: Jan '16 to Present
With the broader path still unclear we will keep our optimism of seeing a clean move in either direction subdued, while attempting to take short-term trades within the current technical landscape.
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---Written by Paul Robinson, Market Analyst