Last week I posted an analysis stating that the best thing traders should do regarding S&P is to remain neutral. The index continues to trade within the trading range of 1840-1880 and with no clear direction and with lots of gap ups or downs. In cases like this the best strategy is to go short near resistance levels (1880) or buy near support levels (1840) with a stop reverse order in case we see a break out. My preferred scenario is the one where we break below 1840 and move sharply towards 1805 where the next important support is found. The consolidation just below the all time highs between 1850-80 makes me feel like a top is forming. This bearish scenario could unfold into something bigger specially if 1805-1795 is broken. However a clear break and close above 1880 should not be ignored as this could signal new buying strength and move towards 1950-2000 points would be very possible.
Short-term resistance is found at 1866 and if broken we could see the index move towards 1880 fast where the important resistance levels are. Support is found at 1844-40 and bulls should remain comfortable as long as these levels are not broken.
Concluding I’m not convinced that the entire corrective move that started in early March is over. I believe that a final push lower towards the 61.8% retracement is more likely than an upward break from these levels. Nevertheless a break above 1880 could clear things up and cancel any bearish scenario and April could be a very bullish month instead. That is why I prefer to be patient and neutral.
As always, thank you for taking the time to read my new post.