News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
S&P 500 Chart Extended, but Momentum Not Worth Fighting

S&P 500 Chart Extended, but Momentum Not Worth Fighting

Paul Robinson, Strategist

What’s inside:

  • S&P 500 in extended state to start the year, but…
  • Momentum & trend remain favorable for longs until price action changes
  • Intersecting trio of lines provides guide for both sides of the tape

Start increasing your knowledge today with DailyFX Trading Forecasts & Guides

The S&P 500 has started the year off on a strong note, with fresh record highs notched each day this week so far. A question some are asking with a wary eye – is it sustainable? Perhaps the better question is – are there signs suggesting it isn’t sustainable?

To end the year, we made a case for why turbulent times lie ahead for the market; S&P 500 volatility is at ‘generational’ type lows, valuations nearly unmatched – historically, and given the rally starting back in February 2016 appears to be a 5th wave of an EWP cycle off the 2009 low. Overall, it is more of a call for an uptick in volatility as instability grows (and yes, at some point a major sell-off), and not necessarily a call for ‘the’ top.

So, while we could be in for a big-picture top and drop, the timing as to its beginning remains unclear – it could start next week, but it may not start for several months, if not longer. Longer-term it looks like we’ll end up lower than where we are today (and significantly so), but for now there isn’t anything in the price action which provides a strong edge for shorts. It’s also not the easiest spot to buy, either, given the recent run-up and increased risk of a dip.

With that said, the S&P 500 cash index closed yesterday at a short-term top-side trend-line extending over peaks since early last month. It could be a spot for weakness to begin developing. Today’s jobs report at 12:30 GMT time could have something to say about that. (Join Senior Strategist Christopher Vecchio & myself starting at 12:15 for live coverage of the jobs report.)

A decline off the highs may bring into play an interesting cross-road of three differently angled trend-lines. The first is the lower parallel of the month-long channel, the second is the trend-line off the November low, and the third is a slope dating back to April 2016. The area just below 2700 is an important one given the confluence. We’ll use these lines as a near-term guide – stay above, trend remains healthy, drop below and sustainable near-term weakness, at the least, could set in.

Check out these 4 methods for Building Confidence in Trading

S&P 500: Daily

S&P 500 daily price chart

---Written by Paul Robinson, Market Analyst

To receive Paul’s analysis directly via email, please SIGN UP HERE

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES