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S&P 500 Techs: Short-term Trading Outlook

S&P 500 Techs: Short-term Trading Outlook

What’s inside:

  • Daily chart not very clean, but opportunity still exists
  • Need to focus on short-term time-frames and keep expectations in check
  • Hourly ascending wedge taking shape

In yesterday’s piece we took a look at the S&P 500 from a daily view, and overall it’s not a very clean picture, is it? The late summer doldrums have thus far morphed into the fall doldrums, but with larger daily ranges – that’s our silver lining, unfortunately. But, with that, the ranges are bigger, so for you ‘hit-n-run’ traders there are opportunities as long as you keep your trade time-frame short and sweet and your expectations tempered. Trade what the market gives you.

Recent price action, most visible on the hourly (cash session hours), is working the S&P towards a one-way move. Over the past week an ascending wedge has been developing, which should be ready to break very soon.

Ascending wedges are often viewed as a bullish development given the higher lows. However, they can certainly break against those higher lows, and given the neutral trend environment we are in, which way we break is really a 50/50 proposition. If we were in a strong uptrend we could assign a higher probability of a breakout to the top-side, but that is not the case here. Bottom line: don’t predict the break, react to it.

The mid-2140s to ~2150 has been problematic for the market. It was once an area of support during late September/early October, but has since turned into a pretty formidable area of short-term resistance. Despite the market holding onto intermediate-term support (horizontal/trend-line off Feb 11 lows) it has been unable to hurdle the less important resistance area. This is beginning to add an additional layer of importance to 2148/50.

A clean break above 2150 will put ball in the bulls’ court, bringing the trend-line off the 9/7 high into focus (~2162 at this time), 2170, 2175, and 2179. A break to the down-side will bring into play 2133, 2124, and the important swing low at 2115.

S&P 500: Hourly

Created with Tradingview

So for now, we will continue to operate under the assumption the market will provide limited opportunities and take quick-hitter trades between short-term levels until the daily chart cleans up.

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---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.