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Yesterday I saw the breaking of a key resistance level in the S&P 500. This could change the entire short term forecast.
The S&P 500 Index finished flat on Wednesday after a quiet session on Wall Street where trading volume was around 3.5% lower than the three-month average. However, trading picked up after the close in index futures as speculation mounted of a bailout agreement in Greece.
The S&P 500 finished the day exactly flat as the Index traded in a tight range, just above the pivot for most of the day.
Apple shares advanced to a new all-time high as the company once again topped $700 billion in market cap and activist investor Carl Icahn said shares still had plenty of room.
PepsiCo also rallied as the company recorded profits above analyst expectations, despite a decrease in sales due to currency headwinds associated with a stronger dollar.
It was not so good for the energy sector which fell by around -0.7% as a whole as crude oil futures dipped back below the $50 mark – the commodity’s second decline in as many days.
After hours
Stock market futures were sharply higher in after hours trading with most indices up around 0.5% at the time of writing. News of a potential extension to Greece’s bailout program is expected to be announced by Eurozone officials and this is helping extend gains in riskier assets.
S&P 500 outlook
As mentioned, the S&P 500 traded in a quiet range on Wednesday and this made it hard for technical traders to eke out a daily profit. Futures started to climb just as the day’s trading came to a close and this optimism is likely to continue today.
If the index was tracing out an expanding triangle in a bear trend, the index would have not returned to the top at 2072.5. Last night the rally extended to 2073.5 so it looks like we have an impulse wave up. Wave (i) is an impulse wave (in five waves on the 15-min chart) and wave (ii) should be in three legs, therefore it’s possible the index will pullback to 2040 to complete wave (ii) before moving higher. If an impulse wave up is in progress the next move will be wave (iii) and the target is near 2125.
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
