Short-term S&P 500 Outlook

Up then down and making everybody frown. That’s been the stock market’s pattern since the beginning of the year. As the worst week of the first quarter is coming to an end, we’ll venture a short-term S&P 500 outlook.

This is probably the messiest S&P 500 chart I’ve ever published, but it conveys two very important points:

The stock market’s action has been messy. The S&P 500 (SNP: ^GSPC) chart shows a lot of overlap along with false breakouts and false breakdowns. This has created a lot of technical support (and resistance) levels.
There are two support clusters. The first support cluster is around 1,825 – 1,840. The second support cluster is around 1,790 – 1,810.

The March 21 rally was the most recent fake breakout (red arrow). Morning trade pushed the S&P 500 to a new all-time high, followed by persistent selling.

SPX32814

A special March 21 morning Profit Radar Report update warned that: “One Elliott Wave count allows for a fake out breakout, followed by a drop lower. Today is Triple Witching. The S&P 500 (NYSEArca: SPY) closed lower on Triple Witching day 71% and the week after Triple Witching 66% of the time.”

This particular ‘Elliott Wave count’ mentioned in the March 21 Profit Radar Report projects lower prices, but the S&P 500 will have to move below the 1,840 support cluster to unlock lower targets.

For the last few days, the Russell 2000 has been our ‘canary in the mine.’ The Russell 2000 captured our first down side target yesterday (view article here: Russell 2000 Captures First Down side Target). As always, when a target is reached, there’s an above average chance of a reversal.

S&P 500 resistance is at 1,866 – 1,870.

For now the S&P 500 is stuck in ‘technical purgatory.’

Various indicators suggest new all-time highs eventually. The question is whether we’ll see a deeper correction before that.

Continuous updates are available via the Profit Radar Report.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

 

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A Revised Short-Term S&P 500 Outlook

Over two weeks ago we expected a rally to S&P 1,830 followed by another leg down. The S&P 500 more than delivered and crushed our already aggressive up side target. What about the immediate risk of another leg down?

The last free S&P 500 outlook (published February 7) titled ‘Short-Term Gain vs Long-Term Pain’ requires some slight adjustments.

The ‘Short-Term Gain vs Long-Term Pain’ article featured a portion of this visual projection originally published in the February 5 Profit Radar Report.

As the chart shows, starting on February 5, the Profit Radar Report expected a strong rally to S&P 1,830 followed by another leg down.

The S&P 500 not only rallied to 1,830, it also closed the open chart gap at 1,845 and challenged Fibonacci projection resistance (going back to the 2002 low) at 1,855.

While a big portion of the forecast (rally from 1,737 to 1,830) followed the script, the subsequent expectation of ‘another leg down’ did not materialize.

This week’s new S&P 500 (SNP: ^GSPC) high alters the structure and likely postpones the immediate threat of new lows.

For now we note that the S&P 500 (NYSEArca: SPY) is struggling to move above resistance at 1,851 – 1,855.

While the S&P 500 has already climbed to new all-time highs, the Dow Jones has yet to retrace a Fibonacci 78.6% of the prior decline.

The Dow Jones chart below shows the U.S. Grand Daddy of indexes struggling with trend line resistance and Fibonacci resistance at 16,215 – 16, 320.

In summary, sustained S&P 500 trade above 1,855 would rejuvenate the technical picture for the S&P 500, but the Dow below 16,320 and below its prior ATH at 16,588, will likely be a drag on the S&P’s up side.

Regular updates along with short and long-term forecasts and real buy/sell recommendations are provided via the Profit Radar Report.

Here’s one indicator that’s consistently capped up side and often caused quite some turmoil:

Indicator: Risk of ‘Black Swan’ Event is Elevated

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.