S&P 500 Index Trading Outlook (3-5 Days): Bullish
A move over 2562 is turning the trend back up.
Despite a lot of whipsaws, it looks right to respect this move.
I will stay bullish barring a move back under 2455 with ideal targets near 2750 and then 2792.
There’s been a lot of back and forth in positioning in the last week, and much of this comes from the volatlity itself.
While my technical style is more position/swing trading in nature (not day trading), it’s imperative to recognize important moves which look to be on the verge of establishing a new trend. At the same time, we have to protect against 10-15% moves against us.
S&P 500 Index Chart
When volatility continues to drop off, this should make it easier to latch onto trends which can hopefully have some longevity. For now, it’s important to be tactical and identify moves which look to have the potential to extend. Monday’s move might have just been just that.
The SPX rise on Monday above 2562 turns the trend back to bullish, at a time when many remain concerned about the rapid spread of COV-19. Breadth came in at 11/1 looked like a positive, and while prices are up to the highs of the range (but slightly above based on Monday’s close) volume pushed to higher levels than anything seen in the past few days.
Financials and Technology both made impressive technical moves, and given their 40% combined representation within SPX, it makes sense to consider following this move. If yields can turn up more sharply, this would add to the conviction in the Financial trade.
Meanwhile, Energy has hung in the balance with the OPEC meeting/G-20 set for later this week and increasing speculation that Russia and Saudi Arabia might be close to coming to terms on a 10mm production cut, but are hoping the US joins. Overall, one should favor longs in Energy into and post OPEC, expecting that many of these stocks are so washed out that any effort to help the situation likely provides a better than average bounce.
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Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.