Weekly market preview – trading plan for Nov. 7, 2016

Weekly summary — S&P 500 CASH INDEX (SPX)

The S&P 500 cash index ($SPX) closed at 2085.18 last Friday, down 41.23 points for 1.93% net weekly loss.

Last week: The SP500 index kept sliding to the downside. The selling was orderly, but broke the short-term key zone at 2120 and the psychological support line at 2100 level.

This week: This is the week of the US presidential election. The market will focus on the election result both before and after the vote on Tuesday. No matter who wins, we expect a brief bounce followed by a decline this week.

Technical analysis

a) long and intermediate time frames

161104-spx-weekly

SPX Nov. 4, 2016. Weekly chart.

The SP500 index broke short-term uptrend line last week and triggered an intermediate-term correction. The index has fallen about around 5% from high to low over the last 11 weeks.

The index failed to hold the last year’s breakout, and gives out a negative outlook in short-term and intermediate-term. But currently this correction still fits within a long-term uptrend.

There is a spiking support line (green) lying at 2075-2065, where it intersects with the short-term down trend channel. This will become a key zone for this week.

Weekly PMO indicator continues with a Sell signal and the accelerating PMO suggest the key zone may not hold in the intermediate-term, but some short-term rally could be seen. But any rally is likely to be short.

b) Short-term outlook

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SPX Nov. 4, 2016. Daily chart.

The S&P500 index broke below its Sept/Oct lows last week and dipped into the June breakout zone. For the short term the trend is down and outlook is bearish.

However the orderly selling of the last several days could be just normal “sell the rumor” behavior before the US election.

For our members outside North America, remember that Tuesday is US election day. It could send the index sharply in either direction, depending on whether Trump or Clinton wins.

However we might also see “sell the rumor, buy the news” in the days following the election. The major short-term resistance is at 2145-35. A move above that resistance zone will be first sign the current correction is ending.

Daily outlook – S&P 500 MINI FUTURES (ES)

Member content

This section contains the detailed buy/sell levels for this week. It is reserved for paid subscribers. Previous market previews are available free of charge in the archives.

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161104-es-daily

ESZ6 Nov. 4, 2016. Daily chart.

ES attempted to snap back from its extended losing streak on Friday, but the Bulls could not hold onto the gains. After the European market closed ES rolled back to where it started and closed in the red.

Today ES could retest Friday’s range if the 2075 level holds up in overnight trading. ES could go back near 2089.50-93.50 for testing.

If overnight trading fails to hold ES above 2072.50, price could drop into 2068-65.50 zone or lower before the bounce occurs again.

One day before the election, a bounce could be seen. But the bounce may have a short life.

Daily PMO and slow STO indicator both have an oversold condition. But it is the 200-day moving average that is likely to indicate if the ES begins a long-term correction here.

Right now the price is a few points above the 200-day MA; watch for a break below that level for a clue to the next move.

Support and resistance

Major support levels: 2075-73, 2056-55, 2043-42, 2025-23
Major resistance levels: 2098-2100.50, 2112-14.50, 2123.50-25, 2152-55

Outlook

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