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S&P 500 Outlook: Monday Rally as Good as It Gets This Week?

S&P 500 Outlook: Monday Rally as Good as It Gets This Week?

Paul Robinson,

What’s inside:

  • S&P 500 bounces on Monday, but could come back under pressure as soon as today
  • Trend off the record high remains negative
  • Levels and lines of significance outlined

Check out the equity markets forecast to find out where our analysts see the S&P 500 ending up in Q2.

On Thursday, we took a look at short-term charts of the S&P 500, Dow, and Nasdaq 100, and they suggested the market was heading lower over the near-term. In the weekly forecast, it was noted that this week could be a tough week for global indices. On Monday, the U.S. got off to a good start following the extended holiday weekend, but was that as good as it gets this week?

While the S&P 500 was putting in a fairly strong showing yesterday, Europe was closed, but as the shortened week begins overseas we are seeing the DAX down 65 bps, CAC 40 lower by 1.3%, and the FTSE 100 shedding 1.6%. This is putting pressure on U.S. index futures early, with the S&P lower by about 9 handles at the time of this writing. Monday’s 20 handle pop could have been a seller’s bounce and easily wiped away in short order.

The trend off the March 1 record high remains pointed lower, with two lower highs and a lower low already in place. As long as the markets holds below the top-side trend-line running down off the early-March high the tone will remain negative. Negating yesterday’s bounce and taking out the Thursday low at 2329 will quickly bring into focus the 3/24 low at 2322. Below that point, nothing substantial arrives until right around 2300, where we have a swing high from January and the lower parallel to the trend-line off the record high. Both points could come into play at around the same time creating confluence, and a spot from which the market could mount a bounce.

But before we get ahead of ourselves, the Monday rally and support just below need to be cleared away before we can start thinking about 2300. With European indices breaking down (and the Nikkei continuing to dwindle), global sentiment is becoming increasingly supportive of seeing this play out.

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.