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S&P 500 Techs: Short-term Trading Outlook

S&P 500 Techs: Short-term Trading Outlook

2016-10-21 11:09:00
Paul Robinson, Strategist
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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

S&P 500 Techs: Short-term Trading Outlook

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.

Start improving your technical analysis skills today and check out one of our several free trading guides designed for traders of all experience levels.

---Written by Paul Robinson, Market Analyst

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