S&P500: The Long And Short Of It
Matt Simpson | Oct 31, 2019 10:08
The S&P 500 closed to record highs, yet with resistance nearby it's touch and go as to whether it can hold above key support.
The S&P 500 closed to new highs following yesterday’s Fed meeting, supported by higher earnings while also taking comfort from Powell’s comments that a hike is unlikely. Technically, it rests on the pivotal level of 3028, yet resistance nearby awaits. A break above the January 2018 resistance level assume bullish trend continuation, whereas a break back beneath 3028 warns of a bull-trap and deeper correction.
Flicking through equities for the S&P 500 showed greater potential for short setups than longs. Perhaps that’s a bad omen for new highs on S&P 500, although part of the reason many longs were rejected were because they were either too close to earnings or overextended without any signs of a pullback.
Sysco Corp (NYSE:SYY) CFD/DFT: Trading just off its all-time highs, prices have had a chance to consolidate below 80 which has provided adequate mean reversion for a potential long setup. The recent higher low has respected the 20-day average and it appears that prices could just as easily break higher as it could produce another higher low to form a potential ascending triangle.
Get The App
Keep I mind that earnings are on Nov. 4, where a notable earnings miss could topple this from its highs. Hopefully though, they’ll be supportive of this compelling setup.
O'Reilly Automotive Inc CFD/DFT: Positive earnings saw this explode higher out of an ascending triangle and found resistance around the monthly R3 pivot (not pictured for a cleaner chart). A hammer at the highs showed prices were exhausted and now a retracement is underway. This may be a little premature for the watchlist, but it’s worthy keeping an eye on none the less given the strength of the breakout.
With little in the way of support above 410-415, traders can see if prices stabilize around a Fibonacci level. If satisfied a higher low has formed, a volatility such as ATR can be used to calculate the ‘invalidation point’ of the bullish bias. Bullish swing traders could then look to enter, or for a more conservative approach, wait for signs bullish momentum has returned to provide greater confidence the low is in.
eBay (NASDAQ:EBAY) CFD/DFT: Long known for its discounts, eBay’s stock price also found itself on sale following poor earnings last week. Thursday’s large gap lower saw it plummet through the 200-day eMA and now prices are clinging onto key support around $35. The fact it has failed to provide any meaningful rally despite the S&P500 hitting new highs is telling, as is the declining volume during this week’s lacklustre ‘rebound’.
Texas Instruments (NASDAQ:TXN) CFD/DFT: The gap lower last week took prices straight down to the bullish trendline and 200-day eMA. So, we’re at another juncture where bulls either save the day and keep prices above these levels, or the dead cat has bounced and we’re waiting for a break lower.
Given the magnitude of the gap from its highs (a breakaway gap) and that the pullback from the trendline has found resistance below the 100-day average, the bias is for a break lower.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.