S&P has staged a downward reversal once again when it reached 1880 and above. S&P did not manage once again to close above 1880 and not only prices reversed lower, the decline as can be seen in our first chart is . 5 waves down are clearly counted in the 15 minute chart of S&P and more downside is to be expected. A three wave upward pull back towards 1874 is my favorite scenario and then another leg down towards 1840-30.
The 1860 price level is a pivotal area. A close below this area will push prices lower towards 1830-40. Short-term support is found at 1860 whereas short-term resistance at 1877.
S&P is currently unable in my opinion to stage an upward move towards 1910-20 as I do not see enough strength from the buyers to make a clear breakout. I believe that it is more probable as long as we trade below 1890 that we will break support at 1860 and will bring in a selling pressure into the market that will push the index towards 1820-30. The chart below is another chart that makes me worry being long at the current levels. Although trend in all time frames remains up, I think bulls have more to lose at the current price area. Remember that forming a top is a lengthy process and takes much more time than a bottom takes to be created. Additionally I will get a sell signal if I see a weekly close below 1826 that could bring the index towards 1750.
The weekly chart below shows me that there is plenty of space in lower price levels for a correction to move and re-test and re-energize the bullish trend we are currently in. We continue to make higher highs and higher lows but I believe April will be the month this changes. I expect volatility to rise and prices to make a downward correction over the coming weeks.
Concluding, I would prefer taking short positions with stops close by and specially if 1860 support fails. I see that more downside at least for the near term should be expected as stated at the start of this post. I believe bulls have more to lose at these levels than bears. Thank you for taking the time to read my new post.