Updating and Planning the Current SP500 Range Play

Apr 15, 2015: 10:56 AM CST

As price continues to trade within a clearly defined range pattern, let’s update our S&P 500 chart and highlight what we should be watching and expecting right now.

Here’s a pure price chart of the S&P 500 (daily) with two Range Boxes highlighted:

Price patterns of the past echo into the future, and we’re seeing a similar pattern to that of January.

The current range pattern – highlighted – is slightly longer than the January pattern and the upper/lower boundaries are defined at the 2,040/2,050 (green) and 2,100/2,110 (red) levels.

We can visualize these as “expensive” or bearish into the red zone and “cheap” or bullish into the green.

The remainder – the yellow – is the value or range zone through which price plays Ping-Pong.

Ranges DO NOT last forever and price will eventually break free (outside) of the range.

In February after a mini-bear trap (an initial break under 2,000), buyers flooded capital into the market to trigger a breakout mid-February above the 2,065 boundary.

The result was a multi-day short-squeeze bullish rally to new all-time highs.

We stand on the precipice of yet another potential bullish breakout where it would be similarly unwise to short-sell above 2,120 should another bullish breakout occur in April (or perhaps May).

Otherwise, 2,100 and 2,110 will be the upper resistance from which we could see another sell-swing to 2,045.

Here’s a broader perspective of additional indicators and how January’s pattern developed and resolved:

Continue monitoring these range-reference levels and plan your swing and intraday trades accordingly.

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Corey Rosenbloom, CMT
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8 Comments

8 Responses to “Updating and Planning the Current SP500 Range Play”

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