S&P 500: Break to New Highs Near, Longs Preferred on Dips
- S&P 500 holds support, turns higher towards new highs
- Dips preferred over buying a breakout
- Market remains well-supported with numerous levels of support below
In Thursday’s post, we described the market as supported for now, giving us a neutral to bullish bias. The S&P 500 popped off month-long trend support and a retest of breakout levels from January. The trend is up and downside levels are holding, hard to be anything at this time but constructive. As soon as today we may trade to new record highs (closing = 2298, intra-day = 2301).
The market has been very choppy since the middle of December; this makes for tough trading and calls on us to be disciplined in picking entries isolated to pullbacks. So, while the market looks poised to pick up some more points for the longs, buying the breakout isn’t the most appealing approach. This is especially true given that there lies resistance not far beyond the prior highs. The Feb and Nov trend-lines converged to form resistance during late January. While the confluence by convergence is past, we will still give respect to these top-side lines on approach. The first is the Feb trend-line, lying ahead around the 2310 mark. It’ll take an aggressive move higher to catch the more sharply angled Nov trend-line.
The market may chop around or decline towards support again, but barring a sharp sell-off below these levels an opportunity may exist for buyers to step in at attractive levels. The area including the old highs around 2277, the 12/30 trend-line, and swing low at 2267 offers a zone of solid support. There are other levels below this zone which come into play that the market would also need to clear for the currently bullish tilt to turn bearish. The numerous levels on the down-side in close proximity to one another will continue to keep the market well-supported for now.
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.