Is S&P starting a new up trend?

S&P has limited upside for now
April 1, 2014
EURUSD in a critical junction
April 3, 2014

S&P yesterday managed to close strongly above 1880 after a series of failed attempts. Not only this is a new all time high, but it is important if you take into consideration how many times before we have seen the index being rejected above 1880 and quickly turn lower towards 1850-60. My main scenario was not expecting this upward break out to happen yesterday but after another move lower towards 1850-40. Nevertheless the market signals should not be ignored and this break out should not be taken lightly.

SPXD

The sideways consolidation in S&P between 1880-1840 has ended yesterday with an upward break out. Although there are certain flaws in this upward move  that bears take advantage, bulls remain in control and the upward potential now has dramatically changed. Lets start talking about the flaws of the rise.

SPXD2

The divergence in RSI and the fact that the rise from 1737 has not corrected even 38% gives bears the hope that yesterday’s break out is a fake one and that soon the index will reverse.

Additionally the rising wedge as shown in the two charts that follow make bears hesitant of changing their view as price is close to the upper boundaries and a breakdown has increased chances as the range tightens.

SPXLONGTERM2

Bulls on the other hand feel comfortable as after a strong corrective move from 1850 to 1737 feel that the market is re-energised and breaking above the consolidation at 1880 is a strong buy signal that could push the index towards 1930 at least. The ichimoku clouds support the up trend the market continues to be in and the bullish pattern of higher highs and higher lows continues to apply in S&P.

SPXLONGTERM

Bulls will only get worried if price breaks below 1840 now. This new all time high is fragile yes, but bulls continue to have the upper hand in this market as they have emerged stronger after the recent correction that was fueled by the so-called crisis in emerging markets and tensions in Ukraine. The short-term outlook for the market is positive as long as S&P stays above 1870 and longer-term as long as it trades above 1840.

As always, thank you for taking the time to read my new post.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.