S&P 500 Trading Outlook (2-3 Days): Caution into Targets
There may be one last opportunity for nimble traders to buy pullbacks on Wednesday in the 2612 – 2617 zone (on futures) with upside targets at 2636-46 into late Thursday/Friday. Note that these upside S&P 500 (INDEXSP:.INX) price targets look important from a time and price perspective.
For now, a bearish stance has been proven incorrect with the move above 2606. Â Trends are likely to extend, yet at the same time are extremely overbought near-term and could see a pullback today to alleviate overbought levels.
See chart with DeMark counts below…
S&P 500 Chart
Technical Thoughts
Well, the thoughts on a stalling out were definitely premature, and staying long this market a bit longer looks to be prudent as Financials have now begun to gain steam.
Looking back, bearish stances were stopped out very quickly as S&P futures flew over 2606, which led all the way up to “Gann” based resistance near 2625.
Momentum has become quite overbought on hourly charts and daily charts show prices having closed well outside the upper Bollinger Band.
However, this, in of itself, is not a Hard and fast rule to sell, and Demark counter-trend tolls suggest Thursday or Friday should line up “time-wise” as a better area to sell.
Regardless of whether investors think tax reform or the Powell confirmation actually have the power to move markets, the algorithms have taken note of this news and managed to push both Financials and Industrials meaningfully higher.
Overall, the NASDAQ (INDEXNASDAQ:.IXIC) is starting to slip vs the broader market is something weekly charts of NASDAQ vs S&P 500 showed fairly clearly (shown below) but Industrials and Financials jumping in to pick up the slack is something which can prevent any selloff from manifesting during this seasonally bullish time, at least temporarily.
Outside of equities, Treasuries remain very much “sideways” despite the yield curve flattening out substantially. Precious metals have made little to no headway of late, but yet industrial and Base metals have shown a few signs of weakness in the short run.  Copper declined to new five-day lows, and will need to hold 305 to prevent a broader decline.  Overall, similar to days past, the price index gain on the S&P fails to tell the whole story.
Thanks for reading.
Twitter: Â @MarkNewtonCMT
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.
