Weekly preview – trading plan for Oct. 31, 2016

Weekly outlook  — S&P 500 cash index

The S&P 500 cash index ($SPX) closed at 2126.41 last Friday, down 14.75 points for a 0.68% net weekly loss.

Last week: The SP500 index reversed from the prior week’s rally. It remained in a short-term downtrend and retested its September lows.

This week: This will be a busy news week. The presidential election will be on the front pages every day. The market will react to any news that may effect the election outcome.

Technical analysis

a) Long and intermediate time frames

161028-spx-weekly

SPX Oct. 28, 2016. Weekly chart.

The long term outlook hasn’t changed very much. The buy signal given on April 1, 2016 remains intact. The intermediate-term trend has given a neutral signal.

The short-term is not too good for Bulls. It is more affected by external news, and it could put more pressure on the intermediate outlook and prompt an intermediate-term correction.

There is a rising wedge pattern on the weekly chart. The weekly PMO indicator has an intermediate-term selling signal. It is bearish and declining. There is plenty of room for it to decline lower if there is an intermediate-term corrective move.

a) Short term

161028-spx-daily

SPX Oct. 28, 2016. Daily chart.

Until last Friday, the S&P500 index (SPX) was basically producing another sideways week.

But more email news from the FBI about the Hillary Clinton investigation weakened the US stock market, and brought in lots of uncertainty just before the election. The stock market doesn’t like uncertainty.

In the short term, the outlook is bearish. Even thought the index holds the price above the June breakout zone, the 20EMA line crossing below the 50EMA line still gives a short-term selling signal.

2117.50 will be a key line for this week. Closing under it could result in a further selloff. This week will be a big news week and some of that news will frighten investors. When investors get scared, they tend to sell.

In the event the 2100 level fails to hold up, the next major support is lying around 2060-2050 . The index could pause at the 200-day moving average line, but eventually 2060-2050 should be expected as the final shakeout move target.

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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161028-es-daily

ESZ6 Oct. 28, 2016. Daily chart.

The bombshell news that the FBI was examining more emails tied to Hillary Clinton hit the market, and killed the earlier rally after a stronger-than-expected GDP report.

The later selling came on rising volume, but the price managed to hold above September’s low.

Today ES is likely to retest last Friday’s range first. It could go up to 2129.50-33.50 if overnight trading holds above 2119.50-20.50 zone.

A move below 2117.50 line could move ES below last Friday’s low and lead price towards 2106-2100 zone to test June’s spiking low area.

Daily PMO indicator went further down last Friday, and STO indicator also points out internal weakness. Both hint at short-term bearishness.

Support and resistance

Major support levels: 2106.50-07.50, 2100.50-2098.50, 2089-88, 2075-73
Major resistance levels: 2152-55, 2162-64, 2171-72.50, 2181.50-78.50

Outlook

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