S&P did not manage yesterday to break above resistance level of 1640. Prices pulled back down towards the 1622 short term support. Trading2day subscribers were notified from 1637 level that we closed all long positions and expecting a pull back. If 1622 was to be broken, then another leg down towards 1615 was to be expected. Prices fell even further and selling pressures pushed prices towards last Friday’s lows.
The recent decline from 1687 is not . There is no clear price structure to imply that the downside is not a correction. On the contrary, the overlapping downward price move makes us believe that although short term pressures are dominating the trend, the longer term bullish trend is still out of danger. From 1680 we were posting that we should expect a downward correction towards 1620-1600 area. Pre-market futures action shows that today the market will test last Friday’s low at 1598. We still believe this downward move is a correction even if prices break below 1598. The correction will most probably find support at 1590-85 level. Although we believe that this decline is corrective, we should respect price action, specially when support levels are broken.
A good sign for bulls would be for prices to break above 1620 and close above it. 1649 is also important resistance that will confirm that bulls have the upper hand. Until then we must respect the fact that short term trend is down as and lower highs sequence is the main characteristic of recent price action.
Nothing has changed for our longer term Elliott wave count regarding S&P. We are cautiously bullish as this wave 4 decline shows potential to go towards 1580-90 area, specially if 1598 low is taken out. More analysis and a view of my trades on S&P, become a subscriber today.
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