Market preview – trading plan for May 23, 2016

Weekly outlook — S&P 500 cash index (SPX)

The S&P 500 cash index ($SPX) closed at 2052.32 last Friday, down 4.79 points for a net weekly loss of 0.23%.

Last week: The SP500 index reached the short-term bearish symmetrical pattern target around the 2024 area and bounced from it.

This week: The index could hold up the 200-day moving average line and continue to challenge the resistance zone at 2065-75. Durable good orders and GDP reports this week will have a large influence on the breakout decision.

Technical analysis

a) Long-term

160520-SPX-weekly

SPX May 20, 2016. Weekly chart.

The long term outlook still hasn’t changed at all.

The intermediate-term has changed a little due to the short-term correction, but retains its bullish outlook.

Now the short-term correction could be ended near 20/40 week ema area.

The short-term bounce could help the index move back up to re-challenge the 2100 resistance line again.

b) Short-term

160520-SPX-daily

SPX May 20, 2016. Daily chart

The neckline of the H&S pattern (see chart) helped prevent the SP500 index from falling last week.

However the ultra-short-term oversold condition also encouraged profit taking and led the SP500 index to bounce last Friday.

The short-term PMO indicator is approaching its neutral area, and which suggests the index could go in either direction.

But the OBV indicator went sideways in the past few days, and suggests there is more chance for index to hold above the 200-day moving average line.

2065-75 is a key zone for index. A break above it could lead the index to breach the bearish H&S pattern and go back to the 2100 level for testing.

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

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