S&P 500: Trading Higher with Europe, Resistance Ahead
- The S&P 500 continues to move higher with Europe
- Markets looking confident on a ‘remain’ vote, but disappointment risk increasing
- Will wait until the storm begins to pass before drawing further conclusions
Final polls into the thick of the day’s vote in the UK are leaning towards a ‘remain’ vote, and markets are, have, been suggesting the same with big rallies in European stocks and the British pound over the past week. The U.S. markets have participated as well, just with less magnitude as expected.
This is setting the markets up for a potential ‘buy the rumor, sell the news’ scenario. The S&P 500 held short-term support in the low 2080s well in recent sessions. Today’s earlier pop led the index just above the resistance zone penciled in at 2105/08, but the way it quickly retreated after crossing over still makes this area a valid point to reference. We’ll extend it to 2110 now.
Moving out to the daily chart, the S&P has been edging up beneath the broken trend-line off the 2/11 low. Should we see further upside beyond the current daily high at 2110, there will be the 6/8 high at 2121 to contend with along with additional longer-term levels right up to the 2137 record high.
It still looks on this end like markets are vulnerable to a set-back either way following the outcome of the vote. Whether it comes on a pop higher and failure as the last week’s buying pressure exhausts itself, or whether a turn lower comes on the increasingly unlikely event that the vote turns out to be in favor of the UK leaving the EU. Not making a prediction here, simple observation on market behavior at this time.
For now, we are just happy to be observers until clarity presents itself. Risk remains quite elevated at this time, sticking to the sidelines until the storm passes is a prudent approach.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.