S&P 500 poised for bigger bear signal (S&P 500 forecast)

Intermediate
  • A further plunge in global equity markets this week as we highlighted on Tuesday with our article on the DAX here.
  • After Monday’s plunge and then a bounce Tuesday, the “risk off” theme has fully resumed through midweek.
  • This is being driven by a combination of:
    • Surging European and UK COVID-19 cases
    • New lockdown/ restriction measures in the UK and throughout Europe
    • Economic data turning more negative, most recently Wednesday’s global Market Flash Purchasing Managers Index (PMI) data
    • US election concerns starting to increase with growing tensions and indecision
    • Tech stocks still correcting from overbought and possibly over valued
  • Below we look at the technical analysis view for the US benchmark average, the S&P 500, which is setting up for a far more negative signal.

S&P 500 future day trade outlook: Downside threats resume for bigger bear shift below key 3190.25/88.5

Day trade update and view

A rebound Tuesday-Wednesday above resistances at 3289.5 and 3306.0/09.5, but capped by 3326.26 (at 3319.75) to then revert lower and push below Monday’s low and further support at 3217.25/12.5, to resume negative forces from Monday’s plunge that wiped out numerous supports (at 3280.75/78.75, 3254.75 and 3234/33), plus from the earlier September sell-off, to keep the threat lower for Thursday.

Day trade setup

  • We see a downside bias through 3210.0 for key 3190.25/88.5; a break here aims for the 3217.25/12.5 swing lows and maybe key 3190.25/88.5.
  • But above 3240.0opens risk up to 3287.25 and possibly even the 3319.75/26.25 area.

S&P 500 future intermediate-term outlook

The early September sell-off below 3319.5 signalled an intermediate-term shift to a broader range seen as 3190.25/88.5 to 3484.25.

Downside risks: Below 3190.25/88.5 sets an intermediate-term bear trend to target 3105.25, 3000.0, 2983.5 and 2923.75.

Upside risks: Above 3484.25 sets an intermediate-term bull trend to target 3587.0, the 3626/30 extension target area and 3709.75.

6 Hour S&P 500 Chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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