S&P 500: final push before correction
Technical analysis of the S&P 500
The market-wide US stock index S&P 500 shows an intact upward trend in all relevant time levels. After a false breakout below the 50-day line up to 4,164 points on June 18, the index started again last week and was able to advance to a new record high of 4,286 points by Friday.
From a price point of view, everything stays in the green. Meanwhile, warning signs of an imminent correction phase are multiplying beneath the surface. For the first time in a long time, there was a small negative divergence in the advance-decline line, both in the daily and weekly charts. The percentage of stocks above the 200-day line has shown such a negative divergence for some time. The McClellan oscillator is still trading in negative territory despite a rally lasting several days and a record high in the index. In other words: the market breadth is weakening. There are also numerous warning signals from the momentum-based oscillators. Finally, the situation in the sentiment indicators tends to be negative. Seasonality is still positive, but in accordance with the typical cycle, an increased probability of a weak phase starting in July can be assumed.
We therefore favor that the current price surge will be followed by a medium-term phase of weakness. However, price signals for this remain to be seen. According to our assessment, the chart shows a plausible maximum target zone at around 4,350-4,400 points, as long as the most recent breakout above 4,257 points does not turn out to be a false breakout. Intermediate goals and hurdles are 4,287 / 4,293 points and 4,307 / 4,314 points. A significant end of the day below 4,257 points would provide a first price warning signal for a pronounced phase of weakness. Confirmation would be a subsequent slide under the more solid catchment area below 4.164 / 4.193 points. We see potential medium-term relevant targets at 4,057 points and 3,854 points.
Note:
Despite careful analysis, Global Investa accepts no liability for the content, topicality, correctness or completeness of the information provided.
The market-wide US stock index S&P 500 shows an intact upward trend in all relevant time levels. After a false breakout below the 50-day line up to 4,164 points on June 18, the index started again last week and was able to advance to a new record high of 4,286 points by Friday.
From a price point of view, everything stays in the green. Meanwhile, warning signs of an imminent correction phase are multiplying beneath the surface. For the first time in a long time, there was a small negative divergence in the advance-decline line, both in the daily and weekly charts. The percentage of stocks above the 200-day line has shown such a negative divergence for some time. The McClellan oscillator is still trading in negative territory despite a rally lasting several days and a record high in the index. In other words: the market breadth is weakening. There are also numerous warning signals from the momentum-based oscillators. Finally, the situation in the sentiment indicators tends to be negative. Seasonality is still positive, but in accordance with the typical cycle, an increased probability of a weak phase starting in July can be assumed.
We therefore favor that the current price surge will be followed by a medium-term phase of weakness. However, price signals for this remain to be seen. According to our assessment, the chart shows a plausible maximum target zone at around 4,350-4,400 points, as long as the most recent breakout above 4,257 points does not turn out to be a false breakout. Intermediate goals and hurdles are 4,287 / 4,293 points and 4,307 / 4,314 points. A significant end of the day below 4,257 points would provide a first price warning signal for a pronounced phase of weakness. Confirmation would be a subsequent slide under the more solid catchment area below 4.164 / 4.193 points. We see potential medium-term relevant targets at 4,057 points and 3,854 points.
Note:
Despite careful analysis, Global Investa accepts no liability for the content, topicality, correctness or completeness of the information provided.
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