S&P 500 Trading Outlook (3-5 Days): Still Bullish into Friday / Monday of next week.
That said, I’m skeptical that the S&P 500 (INDEXSP: .INX) gets over 2800.
We will need to see a close UNDER 2737 to pay attention on the bearish side. Warnings would show up with an hourly close UNDER 2766.
S&P 500 Chart
The S&P 500 (SPY) looked to be on the verge of possibly starting a minor selloff Thursday, yet held where it needed to and rallied back moderately to escape the day with only a minor loss. Additional rallies can’t be ruled out here given the lack of deterioration and trend and Friday’s have been notoriously strong in the last couple months.
However, on this go-around, a push higher to 2800 into today’s close or Monday would have more technical evidence to suggest selling into, given the factors of Technology stalling, coinciding with counter-trend exhaustion. As always we’ll be on the alert for a break of 2766. For now though, it still might be a tad premature if these signals have any importance.
Market Commentary:
Thursday’s selloff was moderately recouped by yesterday’s close, with no real damage having been done. Prices failed to take out the prior days’ lows, and remain well over 2729-37, a downside area of support which when violated would give way to further selling. Breadth was only mildly negative at 3/2, and we saw Technology eke out small gains on the day.
While Energy might have been thought to be weak, it’s really Tech and Financials that are important to watch at this stage of the rally. Software and Semis are both getting close to resistance, and I do expect a stalling out here, as well as in Financials but should happen closer to $27-$27.15 to take profits into, either today, or next Monday on gains. The last 7 of 8 Friday’s have been positive, as one might expect during uptrends like we’re experiencing. Thus, unless we see prices UNDER 2766 early, which held on hourly closes on Thursday, it’s still right to believe that a bit more upside can happen.
Overall, some mild evidence of the Defensives starting to stabilize here after last week’s pullback, and that’s one thing to keep an eye on.
Also, some pretty dramatic swing back higher in Treasury yields which had been largely range-bound for the last week, but made a fairly robust 4 bp rise (10yr) yesterday, breaking minor trends, and arguing for potentially a larger bounce. The Dollar bounced yesterday after several sharp down days, and Gold fell. However, Precious metals have indeed improved, and this pullback should likely offer buying opportunities in the metals given recent upward momentum.
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Author has positions in mentioned securities at the time of publication. 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.
