The Cash S&P 500 Near Term Outlook

S&P 500, Seeing no important Top in here…yet

$SPY

The S&P 500 is up from its 11 February low at 1810, and still within that extended frame of wide ranging from last May.

So far there is no confirmation of a Top yet, that and positive technicals indicate there is room for further Northside.

The market is overbought on the move off of the February lows, that along with a potential rising wedge pattern from a the lows (Reversal Pattern) indicates that the risk to the Northside is rising.

Also, the market is nearing important resistance at the ceiling of the Bearishness from last August, at 2063/68, also the ceiling of the wedge-like pattern from the low, that a potential area to form a more important Top.

Notably, within this extended frame of ranging there has tended to be a few weeks of chopping at the extremes before sharply reversing.

This suggests there will plenty of time to reverse the view and position Vs having to try to capture the exact Top.

The near term support is at Bullish trendline from 12 February adjusted for the 11 February spike at 2015/18, close clearly below would argue a Top is in place.

Again, there is no confirmation of a Top, but risk to the Northside is rising.

Yes, there is room for more near term gains, but my work shows that there is too much risk outlook to warrant chasing the market higher from here.

So, if you are determined to play in this rarefied air wait for a better risk/reward entry, I expect it to be on the short side.

In this past year of range framing, there has tended to be a few weeks of consolidating at the extremes, so being patient for higher confidence of a Top before selling is prudent I believe.

It appears that a important Top is nearing with potential for declines below the 10 February low at 1810.

So, the long-term the outlook from my desk is Bearish

Technical analysis is a method of forecasting price movements by looking at purely market-generated data. Price data from a particular market is most commonly the type of information analyzed by a tech trader.

Have a terrific weekend.

Paul Ebeling

HeffX-LTN