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S&P 500 Snaps Back from Support, New Highs in Sight

S&P 500 Snaps Back from Support, New Highs in Sight

Paul Robinson, Strategist
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The S&P 500 gapped down Monday on a few headlines, namely negative Omicron news. Monday gap-downs are often filled within one to two days as the market is found to have overreacted. This was indeed the case again as we are seeing the market entering Wednesday above the Friday close. It also helped that the October 2020 trend-line was there in confluence with the headlines.

Where could we go from here? Well, it isn’t stepping too far out on a limb to stay we are on path to test or break the old record highs. There is a bit of a ceiling around 4720, with 4743 as the record high. Seasonality, “Santa Claus Rally”, is favorable for the market.

The SPX may get stuck and unable to climb above a relatively stiff wall of resistance, and if this turns out to be the case then an ascending wedge could continue to mature into January where an explosive move may then unfold.

For now, the general trading bias appears neutral at worst, most likely bullish until we see a material breakdown. A turn down towards the October 2020 trend-line could offer up another dip-trip opportunity for would-be longs.

For the full details, please check out the video above…

S&P 500 Daily Chart

S&P 500 daily chart

S&P 500 Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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

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