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S&P 500 Tech Update: Pullback to Trend-line Welcomed

S&P 500 Tech Update: Pullback to Trend-line Welcomed

What’s inside:

  • S&P 500 trades to new record highs on Friday, bias stays higher
  • Not seeing any great set-ups, more basing activity welcomed
  • Market lacking volatility, awaiting general catalyst

See DailyFX Trading Guides for forecasts and education.

On Friday, the S&P 500 and Nasdaq 100 traded to new record closing highs while the DJIA was only able to do so on an intra-day basis. We’ve been leaning on the bias of seeing higher prices, but only tentatively so with price action not providing anything significant for us to hang our hats on.

A decline to the trend-line off the November low could offer an opportunity to see how the S&P 500 responds to a pullback into support. It would also broaden a base for higher prices as well if it holds. A larger consolidation period would make for a sturdier platform for the market to move higher from. In the absence of a solid set-up to trade off of, for now we will maintain a semi-bullish view (which means no shorts at the least) and patiently wait for a good risk/reward set-up.

It hasn’t been an easy market to get a firm handle on in recent weeks, perhaps that will change in the weeks ahead. The inauguration of President-elect Donald Trump coming up on January 20 may help spark general volatility as he begins his work in the White House. Looking at the market through a technical lens, the catalyst doesn’t matter in our book, just that markets are moving. As far as ‘high’ impact data events this week, nothing until Friday when U.S. Retail Sales (13:30 GMT) and U of M Confidence (15:00) will be released. There are several ‘medium’ impact numbers from now until then, please see the DailyFX Economic Calendar for details.

S&P 500: Daily

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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.