Weekly preview – trading plan for Aug. 15, 2016

Weekly outlook β€” S&P 500 cash index

The S&P 500 cash index ($SPX) closed at 2184.05 last Friday, up 1.18 points for a tiny weekly gain.

Last week: SP500 index had the narrowest range week since Sept 2014. The lack of momentum for an upside move should make traders cautious in the coming weeks.

This week: The August major option expirations on Wednesday, Thursday and Friday could move the index on both directions. The market sentiment remains bullish, but overbought, and we may be due for a pullback.

Technical analysis

a) Long term

160812-SPX-weekly

SPX Aug. 12, 2016. Weekly chart.

The signs for the long term remain bullish. The uptrend remains intact. Only the short-term overbought condition cautions us that a minor pullback is due.

The intermediate-term PMO indicator continues to move up. It is rising as the price rises. This is positive sign.

But both PMO and STO indicators are moving into overbought territory, which suggests that the intermediate- and short-term are less bullish. The short-term pullback, if any, is a good sign for long-term investors.

b) Short-term

160812-SPX-dailyThe SP500 index almost completes its three pushes up move on the daily chart. The rally from the June low is close to the ending stage. Given the ultra-short-term overbought condition, it is due for a pullback.

The August low around 2150-45 zone could be the pullback target.

However before that happens we could also see a final push up to move the index up to the 2200 area or a little higher towards the full measurement from the breakout at 2230.42, as we mentioned in last week’s trading plan.

Daily PMO indicator still moves down. It indicates that upside strength is weak, and there is limited room for the upside. A false breakout is likely to be seen this week.

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

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