S&P 500: Suspended in Air, Turning to Hourly Chart for Clarity
- The S&P 500 remains suspended in air following breakout to new highs
- Hourly chart reveals lower highs in place, but…
- Recent price action may be nothing more than a bull-flag developing
The S&P 500 remains suspended in air following the breakout to all-time highs. It’s been a few days since the current advance paused, so the question is: Is this in fact just a pause, or a sign of a turn lower set to ensue shortly?
Recently, we have been discussing the markets propensity in recent years of turning lower within days to weeks after moving to a new record high and trading back below the old record highs (in this case, 2137). But this can take some time to occur and the market can go into ‘grind-em-higher’ mode until it does.
When taking a look at the hourly chart we can see a small series of lower highs taking shape with a top-side trend-line capping the most recent advance on Monday. It’s not a blatantly bearish signal, but does indicate a weakening chart structure in the very near-term. But just as sellers step in, support in the form of a lower parallel not far below could halt a decline. Should the lower parallel hold on a further decline, a bull-flag could begin to take shape for another push to new record levels.
This doesn’t make for an easy proposition from a strong directional standpoint, but does possibly present a guide for operators on the short-term time-frames. Near-term support stands at the lower parallel in the low 2050s, then 2146 & 2137. Resistance comes by way of the top-side parallel around 2165, then the prior high at 2174.
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.