S&P short-term technical analysis

Market out of fuel needs a pull back
May 5, 2014
NIKKEI in danger of crashing
May 7, 2014

Yesterday’s session was an example of why bears should still be very cautious and not confident that a top is in. Despite the weak open in equities yesterday, S&P managed to climb back above 1880. S&P has managed to hold above the EMA 50 on a daily basis confirming that support in the area of 1860-70 is strong. Despite the divergencies shown by the RSI, price our ultimate signal giver still favors bulls. Price continues to make higher highs and higher lows. Support is now found at 1864 and 1850. A close below 1864 will push the index towards 1850 which is this weeks important turning point. A break below this price level will push the index towards 1833 at first and then towards the recent low at 1814 with increased probability of breaking below it.

SPXD

Until 1864 is broken, trend favors bulls. However bulls should not be overconfident as well. The 1900 level seems very difficult to be broken upwards as price has reached  it many times only to get rejected every time it got close to it. My expectations are bearish regarding this index. My target for the next big move is below 1800, but the strategy on how to trade such a choppy market is very important. Risk and position management are crucial when markets behave like this and when market remains in a trading range for so much time. Knowing when to sell and when to add to short positions is very crucial as this market has the ability to make fake breakouts all the time.

spx1334

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As always, thank you for taking the time to catch up on my thinking.

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.