This is despite the Russian invasion of Ukraine continuing to impact market sentiment. In early US trade, the S&P and Dow were down more than 1.64% 0.81%, 1.5%, and 1.5%, respectively. The indices are trading just above support at the yearly lows. These are the invalidation and targets for the SPX500, NDX, and US30 technical price charts over the coming week. Check out my Strategy Webinar to get a more detailed breakdown of these technical stock setups.
Technical Outlook: In my last S&P500 Tech Outlook, I noted that SPX500 was “attempting to break below critical support into the close week at 4364/72- A region defined by the 61.8% Fibonacci recovery of the entire 2019 rally at 4277- Look for a larger response there IF achieved.” SPX plummeted further the following week before recovering sharply from a sliding parallel extending past the 2019 lows.
This week’s rebound failed to meet the 52-week moving mean. A breach or close above this threshold would cause the near-term attention to shift higher towards the 61.8% Fibonacci range at 4547. Broader bearish invalidation remained steady at the 4677 weekly high. Weekly support unchanged @ 4197, backed by the 2019 Trendline- A break/close below this slope could threaten another bout of accelerated loss towards key support at May lows/ 100% extension to the annual decline at 3993-4035.
Bottom line: We believe the S&P 500 pullback is within the bounds a wider uptrend. We’re trying to confirm the low with another test of slope support. Trading perspective: Look for a reaction to slope support for guidance IF reached – ultimately a close below the trend would end a multi-year-old uptrend in this index. Stay agile here.
A summary of IG Client Sentiment indicates that traders are net-longing the S&P 500 – the ratio is at +1.27 (55.66% of traders are long) which is typically weak bearishreading
Long positions are 1.51% lower than yesterday, and 4.51% less from last week
Short positions are 8.31% less than yesterday and 1.27% more from last week
We tend to take a contrarian approach to crowd sentiment. The fact that traders are net-long suggests that US 500 prices could continue to fall. Today’s traders are net-longer than they were yesterday, but are less net-long since last week. Combining recent changes and current positioning gives us an additional mixed US 500 trading bias, based on a sentiment perspective.
