The Key SP500 Price Pivot Planning Level to Trade the Rest of the Week

Oct 21, 2015: 10:49 AM CST

What’s the current major “Bull/Bear” Pivot Price for the S&P 500? On what level should we be focusing?

Let’s take a laser-like focus on this price level and plan our strategy for the rest of the week.

Here’s the simple pivot in the S&P 500:

Our key focal point is 2,033 (technically 2,030 to 2,040) for this week’s bull/bear pivot planning.

This level reflects the 61.8% “last line in the sand” Fibonacci Retracement of the August collapse and recovery.

Ultimately, what happens here determines whether we are “ignore it all” buyers (bulls) above 2,040 or cautiously bearish, anticipating another pullback from resistance.

Let’s start with the “Ignore it All” Bullish Price Pathway Plan:

If buyers shrug off the negative divergences into resistance, then we can expect a quick “short-squeeze” rally toward the underside of the 200 day Simple Moving Average near 2,060.

If buyers continue their campaign (and short-sellers continue to exit their positions), then the upside future pathway opens for the stock market to make new highs into the end of 2015 (or beginning of 2016).

See my prior video “Retracement or Reversal?  Comparing 2015 to 2010 and 2011” for this upward pathway.

Now let’s discuss the “Bearish Resistance” Pathway Plan:The Bearish Plan calls for a simple, nothing disastrous, pullback (retracement” short-term down away from 2,030.

The intraday chart – and prior play into 2,020 – support this thesis.

Let’s zoom-in to the 30-min S&P 500 intraday chart to highlight our negative divergences:

As price crept to new swing highs into the current 2,033 resistance target, momentum, Breadth (internals), and volume (not seen above) all declined as price rose.

That’s a clear negative divergence which suggests a greater probability of a sell-swing ahead as opposed to additional “straight-up” bullish price action.

To be clear, we’re initially looking for a simple pullback “down away from” 2,030 similar to what we saw beginning on October 13.

This bearish price pathway would initially target 2,000 and give buyers a chance to enter on a logical pullback.

Going beyond 2,000, if sellers break the index under 2,000, we could see a much steeper retracement toward 1,965 or lower.

For now and the rest of this week, focus your attention on 2,030 (and 2,035) and trade the movement “away from” this level – be it the bullish breakout “short-squeeze” pathway toward 2,060 or the logical bearish retracement toward 2,000 again.

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Corey Rosenbloom, CMT
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2 Responses to “The Key SP500 Price Pivot Planning Level to Trade the Rest of the Week”

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