The S&P 500 took a bit of a spill on Friday, how does the week of August 12, 2018 look?
The S&P 500 was resurgent last week as earnings and optimism about large publicly held corporations in the U.S. continued and then uncertainty in Turkey created a different complexion. No, it does not mean that the market is going to suddenly turn bearish because of political instability in Turkey, but it is just another emerging country encountering problems. Turkey, Brazil, and Argentina are experiencing economic instability. Turkey’s instability is considered in many ways idiosyncratic and self-inflicted, but there is mild concern is that due to their unique geographic position that they could trigger a domino effect.
S&P 500 Daily Chart
The S&P 500 still is bullish. The price is above both the SMA 50 and 200 while the SMA 50 is above the SMA 200. It is a the portrait of bullishness after what could be characterized as some corrective behavior in the Q1 2018. Recovering to all-time highs for the S&P 500 is a longer and more challenging quest than it was actually going through the process of reaching it during the 2017 rally. All-Time Highs were not met last week, but the market came close to being bullish enough to get there.
It is quite appropriate that in the middle of a previously untested Resistance Zone containing the All-Time High for the S&P 500 as the high-water mark that uncertainty in Turkey would be enough to push the price out of the Resistance Zone.
The RSI is falling just after teasing the overbought zone. There is bearish divergence between the RSI peaks and the price peaks.
Interesting to note that the price teased the Support Zone at 2823.90 and then bounced up as if the market said, “We sold, we may have overreacted, but the price does not belong here.”
S&P 500 4 Hour Chart
The price fell below the SMA 30 line, but not the SMA 120 line. There is a slim resistance point of 2860.80, which is holding up for now after being tested a bit. The SMA 120 line is going to provide resistance, but beyond this, there is little keeping the S&P 500 from dropping below 2800. The RSI still points to a market with some more room to run from a bearish perspective.
S&P 500 1 Hour Chart
The last time the price came out of oversold territory and the price came out of a Support Zone at the same time, there was a bullish bounce that brought the price to the highest point prior to the drop in the First Quarter. the price swiftly bounced out of the Support Zone and now it is in the ether. From a pure structure perspective, 2791.40 looks like it could be challenged. However, the other possibility is a consolidation of sorts in the current price area, which is right around 2844 before making a move one way or another.