Quick SP500 Trend and Range Surfing Update

Mar 31, 2014: 12:00 PM CST

As we end March and the first quarter 2014, let’s take a quick look at the current S&P 500 trend, key levels in play, the current short-term range and update last week’s “Key Inflection Support for S&P 500” post.

First, be sure to read last week’s “Support Bounce Play off the 1,840 Level” post – price played out exactly as would have been expected via the “support bounce” or “trend continuity” thesis.

Compare last week’s chart off 1,840 to the current picture at the top of the range:

S&P 500 SPX Top of Range Trend Daily Update

Price held the 1,840 confluence support area (buyers stepped in; sellers stepped out) which resulted in a sharp upswing back to the 1,875 target price level.

For now, focus on the prior highlighted regions and the previous update “Repeat Topping Price Pattern in the S&P 500” to get a sense of the repeating (echoing) pattern, none of which resulted in a full reversal in price (the uptrend simply continues).

We’re still playing the same scenario (game-planning) as in each prior “weak push to new highs with divergences” – each time resulted in at least a slight pullback as the uptrend continued.

Another breakout here above the 1,880 level suggests that price once again will impulse multiple days higher toward or even above 1,900 – thanks in large part to short-sellers covering losing positions.

With the broader picture in mind, let’s  now turn to the tighter intraday chart for short-term planning:

S&P 500 SPX SP500 Range Rectangle Value Area Price Pattern

I color-coded the short-term (actually the entire month of March 2014) range rectangle price pattern.

The extremes (“spike rejection” or excess) of the pattern rest at 1,840 (confluence with the Daily Chart support) and just above the 1,880 level.

The 1,875 level is actually a more important reference level as we can see from the smaller blue horizontal line.

Similarly, 1,850 has been another key short-term level that is hidden if you only focus on the recent “spike” extremes of the pattern.

Right now, we trade into the 1,875 reference level – there’s a tiny “open air” pocket (red) from 1,875 to the 1,883 level and a potential Breakout via Short-Squeeze opportunity that may develop quickly should buyers push the market above 1,885.

Otherwise, use the “range reference” levels to plan short-term/intraday trades within the broader context of the non-stop bullish uptrend and similar Daily Chart mini-rectangle patterns like this one.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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