Weekly market preview – trading plan for November 21, 2016

Weekly outlook — S&P 500 cash index

The S&P 500 cash index ($SPX) closed at 2181.90 last Friday, up 17.45 points for 0.8% net weekly gain.

Last week: A busy economic calendar and several Fed members speaking didn’t stop the rally in US stocks. The NASDAQ and Russell 2000 caught up to the Dow and the S&P and helped them close higher again.

This week: It is a short week due to the US Thanksgiving holiday on Thursday, and a half day Friday. The volume will be thin, the movement could be very choppy. 2193.81 is all time high on SP500 index. 2200 could be in the cards this week.

Technical analysis

a) Intermediate and long term

161118-spx-weekly

SPX Nov. 18, 2016. Weekly chart.

The SP500 index made a continuation high move last week. There is also an intermediate-term buy signal on the daily chart (20-day ema line crossing above the 50-day ema). The long-term outlook remains bullish.

Based on the weekly chart, a break-out from the bull flag in the intermediate time-frame indicates the bulls are in charge of the longer term. 2120-30 (last year’s range breakout zone) also supports the long-term bullish trend. The area around 2200-2213 continues to be the short-term upside target.

The weekly PMO indicator turned up last week. Even though it hasn’t crossed above its signal line to give a buy signal yet, at least it has bottomed and is making a move toward a new buy signal. The index traded at a high level together with weekly PMO indicator rising suggest the market could set a new record high in the coming weeks.

b) short term

161118-spx-daily

SPX NOv. 18, 2016. Daily chart.

The S&P500 index is just one step away from its all time high at 2193.81. It stalled under this overhead resistance last week with a narrow 10-point range move. This could be connected to November’s major option expiration last week.

This week 2175 level will be the key line for the index. Holding above it could push the index up near the 2200 level.

But there is some negative divergence from the short-term indicator. We may continue to see the index struggling at the resistance to clear overbought short-term indicators. Price at least needs to consolidate – if not advance – this week

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

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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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161118-es-daily

ESZ6 Nov. 18, 2016. Daily chart.

ES attempted to move higher last Friday. However due to option expiration day, the 2185 strike price took control of the price movement and forced the closing price to be under it.

Today ES could repeat last Friday’s move in overnight trading. If overnight trading holds above 2175 level, there is a chance for ES to move back up to challenge new highs above the August high at 2193.50.

The daily PMO indicator accelerated to the upside, and the slow STO indicator remains overbought. Both suggest ES can go sideways or somewhat higher. Buy on dip behavior will continue to be seen.

But as soon as ES makes new highs profit taking will occur, especially if we see an early rally up to 2205-2197.50 zone.

Support and resistance

Major support levels: 2143.25-44, 2134-32.50, 2121-23.50
Major resistance levels: 2188-89.50, 2198.50-97.50, 2208-10.50, 2223.50-21.75

Outlook

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