The S&P 500 (SPX) for July 9-13, 2018.
In this technical analysis preview of the S&P 500 for the week of July 9-13, 2018, we will feature the key information generated by the S&P 500 Chart. Examining the S&P 500 through the lens of Support and Resistance and several indicators on a few different charts to provide a complete picture into the U.S. Large Cap trading week. It is a backloaded week of Earnings Reports to be published as PepsiCo will release Earnings on July 10, Delta Air Lines will release Earnings on July 12, and the big day of Financial Earnings will be on July 13.
S&P 500 Chart – 15 Minutes
There is a clear narrow path of Support and Resistance at least from a Supply and Demand Zone perspective on a 15 minute chart. The Demand Zone is larger than the Supply Zone, but there are stacked Supply Zones to overcome if the S&P 500 is going to rise on the intraday.
From a bigger picture perspective, there is much more clean space between the closest Demand Zone and the next Demand Zone, which may indicate that there is room for the S&P 500 to go down by .75% to 1.25% in the very near term. The upside presents more narrow bands of resistance (Supply Zones).
With technical indicators, the tale told by the above chart is actually supported.
What is noticeable is that the Relative Strength Index is fading as the market flattened on July 6. This divergence may be a sign that the S&P 500 could have a weak or day or two ahead. The ADX was deceptive in telling the story of the strength of the fall of the S&P 500, but it was accurate in depicting the rally. This S&P 500 Chart has it right as far as the +DI and -DI, but the problem is that it is a lagging indicator and traders would have missed out on the run-up.
S&P 500 Chart – 1 Hour
The Simple Moving Average (SMA) of 24 periods crossed over the Simple Moving Average (SMA) of 96 periods on July 5 and the S&P 500 has risen since in the near-term. The resistance from Supply Zones are rather clear on the chart below, but below that is a zoomed-out chart that shows that much like the 15 Minute chart there is a significant amount of resistance to a short-term run up for the S&P 500 Index. In the meantime, it is clear that since the touch of the Supply Zone there is a clear path downward into a Demand Zone. A Symmetrical Triangle that failed to truly form turned into a Falling Wedge, which was an indication that the market was ready for another boost up. The Falling Wedge is not necessarily a reliable chart pattern, but it came through in this case.
Presently, the S&P 500 is in overbought territory according to the ADX and RSI. The +DI has faded and the RSI is over 70, which means that there is a strong likelihood that there could be a downward move.
S&P 500 – 4 Hour Chart
The 4 Hour Chart tells a different story than the 1 Hour Chart. Right now, the price is in the middle of Supply Zone (resistance) and the Moving Averages are looking to make a bullish crossover. There is a good deal of space between the current price and the next Demand Zone, which may serve as a bouncing point. However, if the Supply Zone is broken through, there is nice opportunity for a run up all the way to 2787.90 (0.9% rise away). The following Supply Zone would be at 2832.20 (2.5% rise away).
The reason to be bearish is on this chart below, but it is also a reason to be less alarmed. Consider that it is Summer (for those in the Northern Hemisphere) and that means a less volatile market. The reason to be concerned if you are a bull at least in the short-term would be that the RSI is above 70, we’re in Overbought Territory. However, it may fit in the with the idea of drop into the Demand Zone as illustrated above to set up a bullish run.
S&P 500 – Daily Chart
The price is now higher than the SMA 20, 50, and 200 period lines. There is a giant Demand Zone below that is in purple and has yet to be popped. The SMA 20, 50, and 200 period lines are all in an order that would suggest a bull market. There are two Supply Zones above, but the most immediate Supply Zone could prove to be a major test for the bullish market. The shorter term charts support the case of the 2782.80 Supply Zone proving a major zone of resistance on the path to testing all-time highs for the S&P 500.
Volatility is rather low in the present and flat. RSI 20 has crossed over the 50 Line, which is an indication of bullishness while the +DI eclipsed the -DI.