Short-term S&P 500 Forecast

Surfers wait for the next big wave, investors (or traders) wait for the next big move.

Not sure about you, but I suffer from FOMO (fear of missing out). I hate missing a big move, whether it’s in gold, silver, S&P 500 or any other asset.

The next big move is the tangling carrot that keeps people invested (or trading) much of the time.

But patience is a virtue, and sometimes the S&P 500 just doesn’t go anywhere.

I observed the following via the March 8 Profit Radar Report: “Any red flags are in conflict with bullish seasonality from now until May. The result of opposite forces fighting for the upper hand may be a period of sideways trading.”

The S&P 500 today is at the same level where it was on March 8.

All trading ranges, regardless of have long and boring they seem, come to an end eventually. The S&P 500 has reached a zone that could bust the range.

Why? Because it reached a potential inflection point.

Here is what the April 1 Profit Radar Report proposed: “There’s an open chart gap at 2,086. I favor a rally towards 2,090. We’ll have to look at the structure and buying power behind any such rally, but 2,090 +/- could be a tempting setup to go short.”

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The S&P moved as high as 2,089.81 on Tuesday. Although Monday’s rally was accompanied by strong breadth, Tuesday’s follow was disappointing and trade stalled.

This inflection point is effective only if the S&P soon peels away from the 2,090+/- zone (this zone extends to 2,100). If it doesn’t, we will probably have to consider the entire structure a triangle likely to resolve with an up side thrust.

The triangle remains a viable option as long as trade stays above 2,039 (remember, seasonality is strong until May).

The Profit Radar Report’s recommendation for aggressive traders has been to trade the edges of this range (buy against support, sell against resistance). As long as the edges hold, that’s the best approach to kill time (and scalp some profits).

For continued S&P 500 analysis sign up for the Profit Radar Report. The Profit Radar Report delivers hand-crafted out-of-the-box analysis based on proprietary measures of supply/demand, technicals, seasonality and sentiment.

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 and 17.59% in 2014.

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The S&P 500 is Revealing Must Hold Support

Investing is about buying low and selling high, but it’s also about knowing when to simply wait. Don’t let a month of sideways trading lure you into making short-sighted decisions. Take a look at key technical support and wait for the trade to come to you.

The S&P is trading today where it was on May 22. In other words, no net progress in 2 ½ months.

For the last 30 days the S&P 500 has been stuck in a 37-point trading range.

Investing and trading is about knowing when to buy, sell and simply do nothing. Previously back on July 17, the Profit Radar Report said that: “the immediate down side is limited, the up side is limited as well.”

Sitting on the sideline doesn’t make you money, but it doesn’t lose you money either. Furthermore, not expecting any big moves allows you to wait without being on the edge about missing the next big move.

Like a fisherman waiting for the next big catch, investors and traders are waiting for the next big move. It may take patience, but the next big move always comes and nobody wants to miss it.

Key support helps identify the next big move, because once support is broken, prices generally move to the down side.

The 1-hour S&P 500 (SNP: ^GSPC) chart below reveals important support created by all the seemingly aimless churning of 20+ long trading days.

There is a trend line convergence in the low 1,680s along with the neckline of a possible head-and shoulders pattern.

There is also an open chart gap at 1,706. Chart gaps have been acting like a magnet for the S&P 500 (NYSEArca: SPY) and Nasdaq-100 (NYSEArca: QQQ). Fibonacci resistance is at 1,700 and 1,704 (could ultimately be trumped by the open chart gap).

I’m not ashamed to admit that I don’t know where the next short-term move will take stocks. In fact, in my Profit Radar Report I’ve declared 1,684 – 1,709 a trade-neutral zone.

But, a drop below the support cluster and head-and shoulders trend line should unlock a move to about 1,650 with more bearish potential thereafter.

What about the up side? The S&P 500 (NYSEArca: IVV) hasn’t hit our up side target yet, so new highs (now or after a correction) are still possible. Regardless, the up side is limited and becoming more and more risky.

Specific trades along with entry and exit levels are available via the Profit Radar Report.