Last week we stayed positive overall on the S&P 500 seeing a move back towards the 5200 area as the most likely outlook, so the past few days trading has been largely in line.
The issue now is that the RSI has managed to recover to such an extent that it is now back to the previous break levels, black line on chart. Price also may start to struggle as it approaches the 5150, as this was the break area just a fortnight ago.
So how price behaves around the 5150 area could prove to be quite instructive for the rest of the month. A confident push higher will allow many of these concerns to be quickly allayed and confidence will build for a push back to fresh all-time highs. Whereas failure to push the 5150 at the first attempt will lift concerns amongst the bears that all of the recent price action has been nothing but a minor leg higher within a more meaningful correction.
Despite the coincidence of a number of technical resistances we still are skewed to the positive, and expect the broad 100 period trend, red region on graph, to continue to contain much of the price action in the days ahead Keeping a positive skew for next week, on the caveat that traders may need to be cautious as a rapid move back towards the 5000 area is quite possible on any minor scares, which could be more rapid than usual. But we would not expect the tone to turn bearish overall until/unless the recent lows around 4955 were to be broken.
