S&P 500 Futures Trading Outlook (2-3 Days): BULLISH
Now that S&P 500 has eclipsed 2396, we have filled the gap while many sectors are on the verge of breakouts, including the Industrials (NYSEARCA:XLI).
Over 2404 will drive the S&P 500 futures to 2425-35. And given the pattern since early March, its right to consider the possibility that last Wednesday was just a one-day affair.
Key near-term price areas of focus for S&P 500: 2404, then 2410. On downside: 2386-8
Broad Market Trading Overview – May 24
U.S. futures are showing just fractional gains in early trading, while Asia closed up positive and most of Europe remains mixed. Nothing much expected out of today’s Fed Minutes release, but the chances of a Fed rate hike at the June meeting have risen to near 100%. Equity non-volatility is likely a major reason for this.
A few key developments over last few days…
The S&P 500 (INDEXSP:.INX) got back over the price area where it gapped down, making a test and breakout back to new highs much more likely in the days/week ahead.
Sectors like Industrials (XLI) and Health Care (XLV) also have picked up and now are within striking distance of highs.
Treasury Yields have stabilized and begun to turn higher and Financials have rebounded accordingly. With Financials in the mix, we’re beginning to see multiple sectors start to strengthen in a way that could allow rallies to continue.
While it was right to look to short into bounces after last Wednesday’s big selloff, the trends are becoming more positive near-term. This offers a decent chance of an upcoming breakout again, which should argue for long stances in the short run. With noting that market breadth deterioration is still a concern and momentum is shaky. The larger question of the quality of the rally or participation concerns remain intact.
Thanks for reading.
Twitter: @MarkNewtonCMT
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
