A week ago, I posted my Analysis and Outlook for the S&P 500 (SPY). The venerable index was rallying off its Christmastime low and I was anticipating where and when the balance of power was likely to shift. At the time, I was on lookout for a turn. That watch is now heightened. Here’s my update.
As you can see on my daily candlestick chart below, SPY is reaching technical resistance. Bulls could be slowing their roll.
A Turn Upcoming
That level, marked on the chart by a blue horizontal line, represents: former support, a natural Fibonacci retracement of December’s precipitous plunge, and a bearish pattern price objective. The confluence of all that evidence, plus low volume during the bounce and the time cycle for a turn fitting in, lends powerful weight to anticipation of a coming reversal signal over the next few trading sessions.
SPY closed today’s session at $257.35, consolidating around a shorter-term moving average. Downward sloping trendlines and lines of average price movement exert a negative influence on market price.
I spy overhead resistance in the SPY at: $259, 261.58-$261.72 and $270. That is where I anticipate sellers stepping up to turn prices around.
Underlying support is now at: $256.50, $250-$252, $240-$246, and $233-$236.
There is no certainty market price will reach our line and turn. But there is likelihood. If the market does head south, the turn could accelerate and a retest of recent lows may be in the cards.
Buyers are trying to put in a major bottom. If underlying support fails to hold, we may see another big leg lower. If resistance is broken, bulls will be let loose.
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