Planning the Next Move off the Key SP500 Level of 1650

Aug 19, 2013: 2:11 PM CST

After breaking under the rising 20 day EMA (as mentioned in the prior update), the SP500 traded quickly down toward the 1,655 support and indicator confluence.

Let’s update the plan and see what the chart suggests to do at the new price inflection (planning) level.

Here’s the Daily Chart so far:

SPX SP500 Daily Chart Technical Analysis key Support Level Trade Planning

I wanted to use this post as a quick update of the following key price or indicator levels to watch now:

  • Rising 50 day EMA at 1,663 (price has closed three times under this level now)
  • June 2013 swing high price at 1,655 (price is currently under this level)
  • The 38.2% Fibonacci Retracement at 1,652.50 (price is also under this level at the moment)
  • The 1,650 simple “Round Number” index reference level (this is where price trades currently)

For reference, here is the 38.2% Fibonacci Retracement of the recent rally from June to August:

SPX SP500 Intraday Fibonacci Retracement Chart Technical Analysis key Support Level Trade Planning

For simple game-planning, we’ll continue to watch the intraday (hourly and 30-min) charts for any glaring positive divergences in Momentum and Market Internals.

While Market Internals (Breadth and TICK particularly) are higher than the readings on the “collapse” day of August 15, we see slightly lower Market Internals today (with lower price lows) than was the case on Friday’s session.

It’s a bit of a mixed signal, but we would prefer to see visual positive divergences at a key support level to shift bullish ahead of a price bounce/rally up off support.

For an additional reference, see my prior updates on the negative divergences on the Bull Trap scenario (and outcome):

Lessons from the August SP500 Bull Trap

Updating Market Internals on Fall from All-Time Highs

For planning and strategy purposes, again watch real-time charts as they develop relative to the index confluence that stretches from 1,650 to 1,660.

Buyers should be expected to “bounce” the market up off this level as short-sellers take profits (buy-back to cover) and aggressive, ‘bottom-fishing’ buyers (or retracement buyers) nibble shares long (buy shares) at a key support level.

We’ll also note – as I showed above – that price currently trades under the immediate short-term support levels except for the 1,650 simple round number level.

If buyers cannot generate a rally here with buying pressure, then we’ll simply expect another sharp sell-off or liquidation event that could pull the market quickly toward the 50% Retracement or “Half-Way Point” at 1,635 then the  1,625 price cluster along with the 61.8% Fibonacci target into 1,618.

Failure there opens the pathway straight to the full retest of 1,600.

Again, for the moment, focus your strategies on the confluence support levels above and the potential sharp sell-off if buyers can’t hold the market up at these logical index levels.

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Corey Rosenbloom, CMT
Afraid to

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2 Responses to “Planning the Next Move off the Key SP500 Level of 1650”

  1. Charting Market Internals Divergences off Key Support | Afraid to Blog Says:

    […] what happened this morning – as I highlighted in yesterday’s planning post – and it has resulted in a stellar rally and great real-world educational […]

  2. S&P 500: Charting Market Internals Divergences Off Key Support Says:

    […] what happened this morning – as I highlighted in yesterday’s planning post – and it has resulted in a stellar rally and great real-world educational […]