S&P 500: Short-term Technical Update
- Market volatility remains subdued in light volume period of year
- Short-term support and resistance levels outlined
- Keeping trading light until good reason presents itself to trade more aggressively
Yesterday’s price action was subdued, unsurprising for a Monday this time of year. The calendar is light this week, and markets are headed for a choppy week of trading barring any unforeseen catalysts to jostle things up a bit.
The S&P 500 pulled back from a top-side trend-line running off the 7/14 peak, and is currently trying to make its way back higher off the 2174/78 support zone. Can the breakout following Friday’s big NFP print hold, or will it fold, leading to a false breakout? It certainly could and it would be consistent with how markets often act coming out of tight ranges like the one we saw to end July into August. A drop back below 2174 confirms a false breakout and a decline back towards the low-end of the range becomes the risk. Should support hold, then so does the market’s current upward bias.
Short-term levels to focus on: Resistance comes in at 2187, the upper trend-line, then the psychological level of 2200. Support between 2174 and 2178, then the air pocket inside the trading range, with nothing substantial until the 2060/55 band.
Keeping trade size on the light side is a prudent way to approach this tape until we see reason to take on risk; something not likely to happen until we move past the next few weeks into the fall trading season. The S&P 500 Volatility Index (VIX) is hovering around two year lows - volatility is low.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
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