S&P: Has it Broken Out?

<<< Back to All Updates
<<< Macro Updates

$ES $SPX #Macro

Many analysts claimed that S&P broke over the trend line that connected several previous tops yesterday.

S&P 500 index, Daily

As you can see on the chart, it did not break over that red trend line as of now. However, every new bulls attack on that line makes resistance weaker. There is a rule of breakout that says that normally bulls manage to break over a major resistance from the 4th or 5th attempt.

We are watching attempt to break over the resistance of the red trend line number 6.

ES-mini Daily

ES is still sitting under resistance of the red trend line.

This is how a bullish micro path may look like:

ES-mini, 30 min chart

I counted the strong rally that started on Friday and continued on Monday as a corrective subwave b up. Based on a micro count its not clear if that rally has topped. In theory bulls can push higher one more time before getting another pullback in subwave c of wave -b- down (the red move on the chart above):

Three potential resistance levels to stop that wave -b- up are

– 4,055 (the weakest, got hit yesterday),

– 4,067.

– 4,086.75 (the strongest).

Bulls can push higher again to test a stronger -123.6% ext = 4,067 to complete subwave -b- up.

The main support for today is 4,000. If bulls stop this overnight pullback at 4,00 they will have a decent base for another push higher.

Any new higher high made today (over 4,057 high made on Monday) would fire a Daily Overbought signal.

Yesterday we got weekly overbought signals for ES and SPX.

The Daily Resistance-turned-support for ES stands at 3,990.

The Secondary Daily resistance stands at 4,068.75 (nicely aligned with -123.6% ext). This is where bulls can push ES-emini.

(2) Bearish scenario:

ES-mini Daily

Not much happened for bears to abandon the bearish scenario.

Bears can easily argue that we got a very bearish -i- down. -ii- up structure, a starting point for a big decline in wave C down.

Let me explain why we do not have clarity here:

SPY, Monthly chart

The market has been consolidating in a relative narrow range for 8 months. Elliott Wave theory works the best when we get impulsive (trending) moves. Here the market does not have any momentum. That flat consolidation can get resolved with a breakout or a breakdown.

Subscribe to Free Updates

Get Unlimited Access

More To Explore

Important Disclaimer

CastAway Trader LLC, the publisher of this web-site and videos is not registered as an investment adviser nor a broker/dealer with either the U. S. Securities & Exchange Commission or any state securities regulatory authority. Users of the website www.castawaytrader.com and viewers of the videos are advised that all information presented on the website is solely for informational purposes, is not intended to be used as a personalized investment recommendation, and is not attuned to any specific portfolio or to any user’s particular investment needs or objectives.

Trading stocks, options, or futures carries a high level of risk, and may not be suitable for all investors. Before deciding to trade, you should carefully consider your objectives, financial situation, needs and level of experience. CastAway Trader LLC provides general overview of trading methods that does not take into account your objectives, financial situation or needs. The content of this website must not be construed as personal advice. All trading setups and/or trades presented in the web site and/or trading chat room by CastAway Trader an/or by other members of the chat should be considered hypothetical for educational purposes only and should not be expected to be replicated in a live trading account.

An investor could potentially lose all or more than the initial investment. You should not speculate with capital that you cannot afford to lose. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style.

You should be aware of all the risks associated with trading. You should seek advice from an independent financial advisor.

Any information posted on this web site is not to be construed as an offer to sell or the solicitation of an offer to buy, nor is it to be construed as a recommendation to buy, hold or sell (short or otherwise) any security. All users of the website must determine for themselves what specific investments to make or not make and are urged to consult with their own independent financial advisors with respect to any investment decision. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. All opinions, analyses and information posted on the website are based on sources believed to be reliable and written in good faith, but should be independently verified, and no representation or warranty of any kind, express or implied, is made, including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, CastAwayTrader LLC and its officers and employees undertake no responsibility to notify such opinions, analyses or information or to keep such opinions, analyses or information current. Also be aware that the owners, officers and employees of the web site www.castawaytrader.com may have long or short positions in securities that may be discussed on the website, Premium Trading Chat room and/or in the videos posted by CastAway Trader LLC.

Past results are not indicative of future profits.

Subscribe to Free Updates

Get Unlimited Access