What’s inside:
- The S&P 500 and Nasdaq 100 have offered good short-term levels among the chop, but…
- That should become increasingly difficult as the market works its way towards a make or break point
- The direction of that break and how it responds accordingly will likely dictate the foreseeable future
Recently, we have been looking at the S&P 500 (Nasdaq 100, too) through a short-term lens, with several lines of influence on the hourly chart providing good reference points for short-term trades. The price action on the daily chart continues to funnel towards what should soon amount to a breakout in one direction or another.
If the market breaks down it will quickly arrive at trend-line support rising up from the Feb 11 retest lows, and how it reacts at that point could be a big tell for how things will continue to unfold for the foreseeable future. A strong hold of the trend-line would suggest the initial break of the wedge formation was false, and the market may quickly rise from there. However, a break below the trend-line will quickly bring into play the 9/12 low at 2119, and significantly increase odds of seeing a material sell-off.
On the flip-side, should the S&P take out the top-side trend-line of the wedge, then the market will be gearing up for a move in line with the general trend, and eyes will be set on to the record high just shy of 2194 and higher.
Created in Tradingview
As noted earlier, we have been finding good levels on the intra-day time-frame to make plays off of in recent trade, but as the market compresses towards the apex of the wedge trading will become increasingly more difficult until a sustained breakout takes hold.
The break we are looking for should come soon, as we are arriving at the crossroads between the top and bottom-side trend-lines. But until we do, we will need to continue keeping expectations of a large move developing in check. Those with patience will prevail.
Check out our Q4 forecasts and find out where our team of analysts see FX, commodity, and stock markets heading into the end of the year.
---Written by Paul Robinson, Market Analyst
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