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Standard and Poors 500 technical analysis, calm before the storm

SPX News by Simon Kazinsky on 10:46 April 09, 2018 EST

The Standard and Poors 500 index is refusing to drop below the 2,600 mark.

After its flash crash back in January it hit a long term supporting moving average just above 2,500 and bounced briefly back to 2,800 almost as quickly as its descend.

The index has subsequently come down to the 2,600 and volatility has picked up significantly with
multiple swings of +/- 1% in a matter of hours that are making life difficult for trend traders.

Retail speculators have shifted from fighting the uptrend to neutral and have been positioned net long for first time in years. This, combined with current price action and the pick up on volatility warns we might be witnessing the setting of a long term top on US equity indices.

An end to the relentless ascend of US stocks appears to be in the making but the descend does not necessarily need to be abrupt and definitely will not happen in a straight line.

After an apposing NFP report last Friday showing the creation of jobs in the US has substantially shrunk in the past month the S&P 500 index refused to set a new lower low despite being in the vicinity of the January flash crash year low.

2,600 is now a critical level, but in the short term, the outlook appears positive and 2,700 might be tested in the next 3 to 4 weeks based on the pace of previous up swings. The index could even climb briefly to a new top.

Even though I am bearish on the index my central scenario is that it will rise to between 2,800 and 2,950 topping either at the end of this month or in May before a new powerful wave down starts that will then take the index to the next target down in the 2,400 region.