Market preview – trading plan for June 13, 2016

Weekly outlook — S&P 500 cash index

The S&P 500 cash index ($SPX) closed at 2096.07 last Friday, down 3.06 points for 0.01% week loss.

Last week: SP500 index made new highs for this year early in the week but retraced in the last two days. The breakout is considered as a fake move.

This week: The pullback probably continues before Wednesday’s FOMC rate announcement. 2050 will be the pivotal level, which will likely indicate if a bearish or bullish move should follow after the FOMC rate announcement.

Technical analysis

a) Long-term


SPX June 10, 206. Weekly chart.

There is not much changed in the long-term outlook. The SP500 index still holds at the top resistance area of the well-established consolidation range 2112 to 1800.

But the price pattern is not impressively bullish. Instead it seemed that buyers were ready to take profits every time the market moved up.

The intermediate term is overbought and has a negative divergence between the indicators and the price. Last week the breakout move should be considered as a fake breakout. A break below 2020 could trigger intermediate-term correction.

b) Short-term


SPX June 10, 2016. Daily chart.

The SP500 index returned back into its trading channel established in 2015. It failed a test of the overhead resistance at the all-time highs, which could lead to a simple pullback in the short term.

The daily PMO indicator turned down last Friday, and is still under the downtrend line. OBV indicator also declined, and we expect more declining this week. Fed meeting and FOMC policy announcement will be the big influence for this week’s trading. Either a big surge or a big decline should be expected. Perhaps both.

Daily outlook – S&P 500 mini futures (ES)

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