S&P 500 Technical Outlook: Correction Over?
- S&P 500 surges with global markets following round one of French elections
- Breaks multi-week trend-line, recaptures November trend-line
- Still looking for one more level to be overtaken before calling the correction over
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On Friday, this is what we had to say regarding the current technical structure in the S&P 500: “The case for lower prices is still intact, but barely. The market needs to turn lower pronto or else we will be looking to change gears towards a market rally.”
Yesterday, global equity markets surged thanks to the outcome of the first round of the French elections. No market was left behind. The 1%+ rally in the S&P put it above the trend-line running down off the March 1 record high and the index also managed to recapture the November trend-line. To further increase the likelihood we’ve seen the worst of the multi-week correction we would like to see the swift 4/5 reversal-day high at 2378 taken out, first. From there it shouldn’t take long for the market to reach new record highs.
Before running off the to the races it’s possible we first see a decline from here and fill Monday’s gap, but we’re not banking on that at the moment as a high probability scenario. True, gaps often get filled, but not always in a very timely fashion. General risk appetite looks strong enough to keep the market from falling back that far.
To conclude and reiterate; until we see the 4/5 high overcome we aren’t ready to call the correction over. We are placing importance on that day simply because of how violently the market reversed (it was the day the March FOMC minutes were released). Beyond that day high only 2390 stands in the way of the record high at 2401.
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.