Weekly market preview and trading plan for week of Dec. 28, 2015. Free!

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Weekly outlook  — S&P 500 cash index

The S&P 500 cash index ($SPX) closed at 2060.99 last Friday, up 55.44 points for a big net weekly gain of 3% .

Last week: “Thin to Win” brought lots of ultra-short time players into the market. The market had an oversold bounce, and recovered most of the loss made in the prior week.

This week: the final week for year 2015. We still can see a movement similar to last week. – run up first and sell in later two days – if there is no external news involved. The Index will try to hold up for a positive closing for the year. But it is not certain that will happen.

Technical analysis

a) Long-term

SPX weekly chart

SPX weekly charta) Long-term

There are only three and half trading days left for this year. The six-year long-term uptrend has been strong and bullish since index made its low in 2009. It hasn’t been touched for four years after the correction made in 2011.

The four-year uptrend line was broken in August this year. Since then this broken uptrend turns into a resistance line, and continues preventing the index from moving above it.

The index made a high around the 2135 area in May and kept making lower highs in the following months. The price has been forming a round top with multiple shoulders. The key support line could be lying around 1850, the six-year uptrend line. This support could be retested sometime in the future.

Right now we don’t know where the actual yearly closing price will be. We expect the yearly doji pattern will be formed to give out a reversal signal for the long-term price move at the last day of 2015.

b) Short-term

SPX Daily chart

SPX Daily chart

Based on last Thursday’s closing, the index had a slight gain for this year. But at the end of this year, bulls will fight for closing above 2055 line and bears have to fight for closing under 2000 level.

The yearly closing price will color expectations for next year. This week could see some kind of a big swing at the end of two days, but the yearly closing price for the index still could be around the 2055 area.

2093 remains resistance for this week and 2014 should be major support for this week. As long as the index doesn’t move outside these resistance and support lines, another Pump-and-Dump should be expected this week.

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

ESH6 Daily chart

ESH6 Daily chart

Last Thursday ES gapped up at open and made a high at 2059.75 with very light volume. But before the market closed, ES sold off quickly and gave up all the gain. That was a typical holiday move: pump the price in early trading, but traders didn’t want to be holding positions over the holiday.

Today ES could repeat last Thursday’s range if there is no important external news to generate a big price swing. There is an ultra-short-term downtrend line on the daily chart. So far that downtrend line overlaps the 50- and 200-day moving average lines and acts as a resistance zone from 2055-60. As long as ES doesn’t go above that zone, odds favor a retracement back down to the December low area.

However if ES breaks above 2065 line, the price could run up to the 2080-90 zone again.

Support and resistance

Major support levels: 2000.50-1998.50, 1990.50-92.25, 1975-72, 1962-58
Major resistance levels: 2068.50-2069.50, 2075-78, 2088-95.50


Short-term —- Neutral
Medium term —–Neutral
Long term —- Bullish

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