Technicals | Apr 06 2016
Bottom Line 05/04/16
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 2023 / 1969 / 1891/ 1820
Resistance Levels: 2117 / 2135 (all time highs)
Technical Discussion
'U.S unemployment presently sits at 4.9% which is its lowest in almost 8 years.' The Fed met last week and kept interest rates on hold, yet more surprising was Yellen's sudden lack of interest in increasing interest rates again anytime soon. The dovish comments contradicted previous comments by other members only a week earlier. It weakened the U.S dollar yet excited the markets to the extent that it has now pushed price up to 2075 which was right on our trades profit target. So a very good outcome regardless of what happens from here. April and May are historically far from being good months for markets seasonally, so with price now fully stretched within an overbought divergence indicator, the tide may well be about to change over the coming weeks.
Reasons to stay longer term bullish (yet further consolidation still required):
→ S&P 500 earnings continue to be well supported overall
→ The IT sector is seeing ongoing rapid expansion and innovation
→ Elliott Wave count continues to have motive bigger picture
→ medium term consolidation still required throughout 2016
There has been a lot to like about the move forward off the February 1810 lows. Dips were well supported and price action overall impulsive to the upside. The break above the 200 day moving was also encouraging yet we do question whether this move is going to be able to be sustained. The lowering line of resistance is only slightly above present levels and as mentioned price is well over bought right here. Within our bigger picture analysis further consolidation within the 
1800 – 2150 range would not be out of the question, and in fact this continues to be our ongoing expectation for now.
Note: Markets are considered to have potentially turned from bullish to bearish if price retraces 20% or more off their high point via a move that sticks. In the case of the S&P 500, this number comes in at 1708. So our longer term bullish analysis will stay in place til then.
Trading Strategy
Our long trade at 1948 has now tagged our 'take profit target' at 2075. So we are banking some nice profits via an impulsive move higher that gave us very little in the way of any frustrations. So back to the sidelines now with the S&P 500, and even though there may be upcoming opportunities to short the Index basis our shorter term views, it is the bigger picture bullish prognosis that has us more excited once this larger consolidation phase finally runs its course.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
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