Our analysis on S&P has given follower another 16 points yesterday. S&P not only got rejected at 1390 area (1388 high) during regular session, it tried again yesterday in pre-market to reach those levels again and got rejected once more. It was clear that selling at that point using Tuesday's highs as a stop could prove very profitable. Moreover if prices were to break 1370, they were expected to be pushed lower towards 1360-50 area. And that is what really happened. Prices broke support level at 1370 and the index closed at 1355 with 1352,50 as a low. So even if you followed the strategy to sell when 1370 was broken, you would at least have profited 10 points (1360) or more.
What now? Bears have the upper hand and it seems like the index will visit lower price levels. Support is now found at 1345-35 area. Prices could bounce upwards as a short term correction that will be met with selling pressures once more. 1403 is an important price level at the time being as it was before it was broken. Now however bulls are on the run and want to try to push prices above that level as bears were on the run when the market was at 1470-60 and wanted to break it.
Taking a closer look at our chart, you can see the potential wave count plotted on the chart. When the entire move from October highs is finished, we will have a clear view of whether the decline is impulsive or corrective. Many things change on how we count the last upward wave in S&P where it failed to produce a new high (DJIA did produce a new high). For the time being prices move downwards impulsively.
Resistance levels to keep in mind are 1361,50-1381-1390-1403
Support levels at 1345-35
Direction bias : down
Thank you for taking the time to read my post.
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