Stock Markets have started to show some signs of stalling in the early parts of this year, and this could indicate the potential for weakness given our proximity to the historical averages. The S&P 500 continues to trade near its record highs but the lack of event drivers over the next several weeks suggests that there is a growing possibility that markets could gravitate sideways to lower over this coming period.

In the chart above, we can see that market prices in the SPDR S&P 500 Trust ETF have actually come off sharply and formed a clear to in the 280.10 region. Given the surge in short-term volatility that we have seen in this area, it would be reasonable to expect that markets will have a difficult pushing through this resistance level on first attempt.

First support now comes in at 275.60 and a drop back into this price zone will give the short-term indicator readings some time to work off their overbought conditions. The 200-period exponential moving average on the hourly charts is now rising quickly, and so if we do not see some better follow-through here shortly it looks more than likely that a good portion of the daytrading market will start looking to throw in the towel.

We outline a support and resistance trading strategy outline that resembles the current situation seen in the S&P 500, as the benchmark has moved almost entirely in one direction (upward) over the last year. Overall, the bias will not be changed unless SPY prices move back below the 200-period EMA on the hourly charts. This would suggest that a period of consolidation is actually in place and that a more significant top could be forming on the daily charts. Until then, will look to keep things simple in S&P 500 positions and use support and resistance strategies into the end of this month’s trade.

By New Forex Trends

http://newforextrends.com/

© 2017 Copyright New Forex Trends - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.