What’s inside:
- The S&P 500 closes above key 2100 level
- Still has resistance not far ahead, but overall price action suggests higher prices
- NFP today could shake things up if we see a sizable deviation from expectations
After three days of attempting to push lower the S&P 500 was unable to succumb to selling pressure. Our most steadfast level of support at 2085 held almost to the exact handle on Wednesday, and the Thursday morning push lower was quickly rejected in the first thirty minutes of trade following the cash open (930 EST time). There was a brief dip below the trend-line off the 5/19 low, but it was quickly recaptured.
The day’s rally carried the S&P to a closing price above the 2100 level we had penciled in as our first level of significant resistance. The futures market was open on Monday during the Memorial Day holiday, with the S&P rising to 2105, but everything we have been basing our analysis off of has not involved the very thinly traded level. However, in overnight trade it seems to be respecting the 2105 level as it consolidates right at it. With that in mind, we will give it more weight now.
With 2100 behind us on a daily closing basis we will turn to it as support and look for a breakout above 2105 to 2111 as long as it maintains above the whole figure at 2100. Beyond 2111 our next focal point quickly closes in at 2116. If the market can garner additional steam above 2111/16 there is a slew of resistance in the 2120s up to the 2137 record highs set last year.
The market has its work cut out for it to reach those old record highs, but so far it making good on the bull-flag breakout on May 24 along with maintaining a solid short-term upward trend structure. We haven’t been the biggest believers in the rally, largely because of all the resistance levels to our left on the daily time-frame. However, price action is not telling us we should be bearish in the short-term, so at the least for now we will continue to keep our bear claws sharp and out of harm’s way. Establishing longs on dips into support (like the dip into 2085 the other day) will likely offer the most fruitful opportunities until there is a sharp turn lower negating the recent trek higher. 2100 might be out next best ‘dip-trip’ opportunity.
A failure below 2100 and trend support would warrant caution and depending on the momentum of such a break we would possibly have to shift our focus back on the 2085 level.
SPX500 Daily
2-hour
Today is NFP day, and with that a spat of volatility could be coming our way if we see any significant deviation from expectations. Analyst are looking for a print of 160k for May, with unemployment edging lower to 4.9% from 5% in April. The market will also be watching the labor participation rate which was most recently 62.8% and the average hourly earnings for signs of wage inflation. (April reading was 2.5% YoY.)
---Written by Paul Robinson, Market Analyst
You can follow Paul at @PaulRobinsonFX
