Exhaustion in the S&P 500?


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Wednesday’s daily close in the S&P 500 above 1710 in the wake of the Federal Reserve’s decision to not taper its asset purchase program puts the index in a very positive cyclical position. A weekly close over 1710 would be further evidence that index has more upside in the weeks and months ahead. In the short-term, however, the index looks a bit spent. On Wednesday’s push to new all-time highs a 1500 NYSE tick was seen, which is historically a clear sign of exhaustion and especially so following a 100 point move in three weeks. Our cycle analysis suggests the next day or so is a clear turn window where the index is prone to a minor turn. In the longer-term scheme of things we will be looking to buy into this dip if it develops. In the short-term, however, we like getting short the index near current levels as the risk to reward profile is exceptional.

S&P 500 Daily Chart: September19, 2013

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Range_sep_19_body_Picture_2.png, Exhaustion in the S&P 500?

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risks in Coming Sessions:

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Range_sep_19_body_Picture_1.png, Exhaustion in the S&P 500?


Resistance: 1732(Fibonacci), 1740 (Gann)

Support: 1710 (Gann), 1692(Fibonacci)

Strategy: Sell SPX

Entry: Sell SPX at 1730

Stop: 1-day close above 1735

Target: 1710

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter at@KKerrFX.

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