S&P500: 2757-2800 will be difficult to negotiate

S&P500 Index has has so far successfully survived the 10-yr long bull trend. This is certainly one of the longest lasting and surviving bull trend in the history of US Stock Markets. The study of long term Weekly Charts of S&P500 Index however throws up some points that warrant our attention. These technical development also raise our caution levels with regard to the current structure of the technical charts.

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If we examine the above Weekly Chart of S&P500, it is evident that the uptrend that began in 2009 still remains intact and the upward rising channel which is now 10-YR long has not shown any structural breach. However, at current juncture, few technical factors raise some caution with regard to the immediate trend of this Index going forward.

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If we look at the upward rising channel, the S&P 500 made first attempt to break out of that channel as it marked a high of 2872. It retraced back inside the channel and made yet another attempt to break out as it marked a higher high at 2929. This level, or the new high of 2929, came with a very explicit bearish divergence on the RSI which did not form a new high along with the Index. It distinctly formed a lower top and is seen doing so and inch lower. The Index crawled back in the trading range and the upward rising channel again.

Going ahead, it breached its 50-Week MA which is presently at 2757. Even after the present pullback, the Index still trades lower than its 50-Week MA after marking a lower top. Any pullback will find resistance at this 50-Week MA of 2757 and the 2820 level which happens to be the upper rising trend line of the present channel. This zone of 2757-2820 is expected to remain turbulent for the S&P500 Index in the immediate short term.

The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Milan Vaishnav, CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Equity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his experience in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily basis to ET Markets and The Economic Times of India. He also authors one of the India’s most accurate “Daily / Weekly Market Outlook” — A Daily / Weekly Newsletter, currently in its 15th year of publication

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