S&P 500 Trading Outlook (3-5 Days): Stalling out expected between now and Friday
A move above 2895 would be temporarily bullish, but this area very well could cap rallies. Bears would be in control again on a move under 2865
Any reversal and pullback under Friday/Monday lows puts the bearish case back on the front burner for immediate pullback to 2800-7.
The S&P 500’s rally attempt looks to be right back into an area of key upside resistance which is thought to be important heading into mid-week and mid-month when seasonality starts to turn more negative for “Septembers” of mid-term election years.
Market breadth has simply not been sufficient to give much conviction to equities rallying back to new highs. And if yesterday’s Semiconductor move was any guide, it’s still important to watch these patterns carefully for any semblance of failure between now and early next week.
Overall, the area at 2895 is important, and above would be a mildly positive development that could allow for a more meaningful retest of highs. Conversely, dropping back down to test lows would also be significant, and under 2865 turns the trend bearish quickly.
Overall, while selloffs may prove to be muted this month, it doesn’t yet seem like markets are “out of the woods” so to speak. Extreme selectivity is still required, and it’s a must to keep tight stops on longs.
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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.