Technicals | Jun 29 2016
Bottom Line 28/06/16
Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Down
Support Levels: 1993 / 1969 / 1891
Resistance Levels: 2135 (all time highs)
Technical Discussion
Well we talked about it all last week in our reviews, and even though we had no idea which way the U.K referendum vote was going to go, one thing was for certain, and that is that markets were going to be jittery. As history now reveals, the exit vote won out on the day, so now it is just a matter of keeping track of price action until the dust can finally settle with confidence returning. I'd be hesitant to put a time line on this as many forecasters are presently trying to do, yet if price drops below 1925 then we will need to sit up and take serious notice about what could be unfolding here. With any drop below 1810 a major red flag putting our longer term bullish analysis well and truly on notice.
Reasons to stay longer term bullish:
→ 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
→ expected retracement in play yet remains healthy for now
We have no problem right at this juncture with the drop in price being witnessed with our chart annotations tonight reflecting our chart from last review which was looking for price to reflect. So it got its excuse with BREXIT. There are now 3 key levels we are going to be monitoring very closely. The 38.2% retracement at 1997 which was achieved in last night's session is the first one. Then we have the 50.0% – 61.8% typical pullback zone circa 1961 and 1925 respectively. We have no problem with price heading here and if we have our Elliott wave count correct, this is the zone where we should start finding buyer support once more. It means price action unraveling as an expanded flat to complete the proposed wave-(ii), with the final wave-(c) that is now in motion unfolding as a 5-wave subdivision.
Right at this juncture this is what looks to be taking shape with price ideally pulling up and consolidating over the coming days within a wave-iv, before dropping one last time as a wave-v into our buy zone. We've been following the longer term Elliott Wave count for years on the S&P 500 and it hasn't let us down yet, so lets hope price continues to behave and maintain its bigger picture bullish structures.
Trading Strategy
'From a trading perspective and in simple terms, what we are looking for is price to complete the 5-wave move higher, then reject and retrace into the 50.0% – 61.8% pull back area. Then we will start looking for an aggressive swing trade opportunity on the long side from these lower levels.' Nothing has changed here with our ongoing trading strategy for the S&P 500 so lets see what transpires over the coming weeks.
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