My second analysis today goes to the largest US index market, the S&P 500 (SP500/US500), a market capitalization weighted index of the 500 largest publically traded stock companies in the U.S where the top 4 heavy names like Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA) and Amazon (AMZN) belong to.

Almost three years ago, I’ve written an analysis for the index that resulted a stop loss.

https://www.finlogix.com/analysis/20210617/sp500-sell-offs-technical-indicators-hinting-bearish-reversal

This was a terrible call. I was fighting an uptrending market and after holding the trade for almost 12 days eventually ended up in a loss.

So here I go again sharing a new outlook after years of missing out.

The first thing I see on the charts is greed. Like many market speculators alike, we can see too overbuying already. Will the buying frenzy keeps rolling once the anticipated CPI reports come out in favor of a weaker Greenback? We will find out soon enough in few hours.

Technically the year 2024 favored the buyers after the S&P500's 3-year trendline resistance at 4820 got broken convincingly with intentions in seeking new highs!

Will this 1-way train change direction towards south?

Let’s have a look at the index’s high timeframes for hints:

Monthly Candle: Medium Green Shaven Bottom

Weekly Candle: Previous close is a Medium Green Body current is a Red Shooting Star Doji

Daily Candle: Yesterday’s close is a Red Shooting Star Doji current is a Small Red Spinning Top

Both the yearly and monthly candles are still expressing bullishness but the weekly and daily candles are already hinting reversals.

Honestly, there is a complex market structure on the 4H view. After the recent drop on the 4100 mark, we have witnessed a strong impulsive move that printed a new all-time high after the 3-year trendline resistance got broken.

Take note, that the very breaking was part of this impulsive move. A spectacular scene indeed!

If I like to trade the index, I prefer to look out for pullbacks and observe if lower highs are made creating a corrective pattern. The recent 4100 drop alone can be the retracement point in conjunction with the fresh ATH.

I can see that the immediate support is the 23.60 fib 4830. My trade plan is to set a buy entry at the 78.60 fib from that 4830 low to the all time high. A profit exit at 5000 mark and a wide stop loss at 4760.

If you are wondering why not to short current price right away, my answer is that the S&P500 bulls are still in control and there might be short squeezing and remember the 3-year trendline resistance can be tested as support coincides well with the 23.60 fib support when price correction has confirmed.

This trade plan’s risk:reward score is only 1.08. Who knows the S&P500 uptrend continues!

Just be careful in trading this index. I highly suggest to wait the CPI figures results first before engaging.

S&P500 Intraday Analysis For February 13, 2024

Feb 13 2024

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