The S&P paused its long-term rally after reaching all-time highs at 1845.75 on January 2. This level proved to be tough resistance to breach and after stalling around this level for a few weeks, prices fell, breaking below the 50-day moving average and below the key 1800 psychological level.
The S&P found strong support around 1740, which is the 50% Fibonacci retracement level of the up-leg from October 9 (1639.38) to the January 2 high (1845.75). The market then bounced back up towards the key level at 1800, which is also the 23.6% Fibonacci level. On Monday, prices stopped just below this key resistance level and in early Tuesday trading, prices have managed to rise slightly above this key level to reach 1800.75.
The markets is trapped between the 50-day and 100-day moving averages. On a daily close above the 1800 level and a breach of the 50-day moving average, there is a possibility for a move towards the all-time highs again (1845 area).
At the moment there are mixed technical signals. The MACD is bearish below zero while the stochastic is extreme and overbought. The ADX is beginning to show a stronger trend but the indicator is only at 33. Stronger signals would be needed before a clearer direction is given.
Fundamentally, the main risk for the S&P will be Fed Chair Janet Yellen’s testimony later on Tuesday.
The S&P paused its long-term rally after reaching all-time highs at 1845.75 on January 2. This level proved to be tough resistance to breach and after stalling around this level for a few weeks, prices fell, breaking below the 50-day moving average and below the key 1800 psychological level.
The S&P found strong support around 1740, which is the 50% Fibonacci retracement level of the up-leg from October 9 (1639.38) to the January 2 high (1845.75). The market then bounced back up towards the key level at 1800, which is also the 23.6% Fibonacci level. On Monday, prices stopped just below this key resistance level and in early Tuesday trading, prices have managed to rise slightly above this key level to reach 1800.75.
The markets is trapped between the 50-day and 100-day moving averages. On a daily close above the 1800 level and a breach of the 50-day moving average, there is a possibility for a move towards the all-time highs again (1845 area).
At the moment there are mixed technical signals. The MACD is bearish below zero while the stochastic is extreme and overbought. The ADX is beginning to show a stronger trend but the indicator is only at 33. Stronger signals would be needed before a clearer direction is given.
Fundamentally, the main risk for the S&P will be Fed Chair Janet Yellen’s testimony later on Tuesday.
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