- Index reverses from key Gann level
- Sentiment at levels seen before other corrections
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The FXCM S&P 500 fair value instrument reversed course yesterday at 1777, which is the 6th square root progression of the June 1559 low. In our experience 6th square root progressions off of significant lows often prompt reliable counter trend moves. What is potentially even more important about yesterday’s reversal is that it came during the first day of the cycle turn window that we highlighted in Monday’s Price & Time. With sentiment touching extremes this week that have presaged other corrections (Daily Sentiment Index touched 85% bulls) in the index there is certainly room for the decline to run if it can get through near-term support hurdles at 1750 and 1744. Today’s initial follow on weakness confirms at least a minor peak is in place and if not already short we like looking to sell on strength (which is not uncommon around the 1st of the month) over the next few sessions.
SPX Daily Chart: October 31, 2013
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
Source: DailyFX Calendar
LEVELS TO WATCH
Resistance: 1770 (Gann), 1778 (Gann)
Support: 1744 (Gann), 1730 (Fibonacci)
Strategy: Sell SPX
Entry: Sell SPX at 1770
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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To contact Kristian, e-mail email@example.com. Follow me on Twitter at@KKerrFX.