S&P 500: Patiently Awaiting Make or Break Event
- S&P 500 chop continues, in limbo
- High-level base, inverse H&S formation still in place; need to trigger first to validate
- Tough trading environment calls for patience
What is there new to say about the S&P 500 since we last discussed it on Tuesday? Not much. The market is in limbo at this juncture. From day-to-day the market looks headed higher, then maybe lower, then higher; but really it isn’t doing anything at all.
The high-level base, taking on the shape of an inverse H&S formation, is still setting up as it stands right now. But before it can come into play there needs to be an official trigger of the pattern by closing above the neckline and beyond the 2282 high set on Jan 6.
The market is currently trading outside the trend-line rising up off the November low, but given it didn’t break it and decline is encouraging. What would discourage the bulls’ case is a decline below the Jan 12 low at 2254 and Dec 14 low at 2248. At that juncture, the market would be well below the top-side trend-line extending over the 2007 and 2015 peaks. The S&P has responded twice off this line, so while it’s long-term in nature, it is mattering right now. A hard break below support would take the H&S scenario off the table, too.
S&P 500: Daily
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It's tough trading right now across all time-frames. Choppiness is making it difficult for day-traders and swing-traders alike. This will of course change with time, but patience in waiting for further signaling will serve us best for the time-being. What will shake the market free from the recent malaise? Your guess is as good as anyone’s. We’ve got our levels noted, though, when things do get moving again.
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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.