S&P has made a pull back yesterday and broke below the first important support at 1765. We were expecting this downward trend reversal from Wednesday and our analysis was early only one day. Prices have broken the upward sloping support trend line and are now starting a downward corrective move at least towards the 38% Fibonacci retracement. We believe that although we may witness another upward bounce after the initial decline, we believe that the index has seen its short-term highs at least for the coming weeks and that prices are ready to make a correction.
Short term support is found at the 1756 level where the middle pitchfork support is. Breaking below that level will open the way towards the next support at 1740. Our final target for this downward move is the 38% Fibonacci retracement. The form and pattern of the decline will give us more information on whether we can expect lower levels than 1726(38% retracement).
Prices can make a back test of the broken upward trend near 1767 but I don’t give many chances now for a new all time high. Our view remains short-term bearish as we believe it is time for a correction relative to the big rise from 1646. For more detailed analysis and a view of my trades not only in SPX but also on other products (Gold, Forex, stocks) become a member today.
As always, thank you for taking the time to catch up on my thinking.