S&P is in a downward trend after topping just above 1700. Our longer term view anticipates a new low towards 1600 or 1580 at least but it is not clear whether we are going first towards 1680-90 to make a double top or straight down from current levels. Our view is that the higher this counter trend rally goes the bigger the decline will be later.
Currently prices are below the important resistance at 1660-65 area. If this resistance is broken then we should expect a final upward push towards 1680-90 and a double top to be formed. If however the resistance holds, prices will be expected to break the short term support at 1653-1640-1630 and head towards 1600-1580.
The longer prices stay above 1650 the more chances we have to testing our previous all time highs. If prices fall below 1650 this week then expect selling pressures to push the index towards 1600. Breaking support levels will be our signal to add to short positions. Otherwise wait for 1680-90.
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