sp 500 daily outlook friday 06 nov tolerate the excess and watch the 2089 support for a potential re

(Click to enlarge charts)

What happened yesterday

The U.S. SP 500 Index (proxy for the S&P 500) had a sell-down of close to 0.85% in the first two hours of trading when the U.S. cash market opened in light of the much anticipated non-farm payrolls data for October that is scheduled for release later today @ 1330 GMT.

The Index had a retest and challenged the 2095 short-term pivotal support before a minor rebound occurred at the end of the U.S. session.

Please click on this link for a recap on our previous daily outlook/strategy

Key elements

The 4 hour RSI oscillator has tested and managed to recovery from its support in place since 15 October 2015, Interestingly, in the past three occasions when the RSI has rebounded from this support, the price action of the Index has also formed a corresponding swing low and recovered (as depicted by the green arrows on the 4 hour chart).
The more sensitive 4 hour Stochastic oscillator has formed a bullish divergence signal close to its oversold region. Both the RSI & Stochastic oscillators that measure price momentum and their latest observations suggest that the downside momentum of the decline seen from 04 November 2015 high of 2115 has started to abate and a potential upturn may occur at this juncture.
The significant resistance stands at 2138 which is defined by the exit potential of the “Double Bottom” bullish breakout, 1.618 Fibonacci projection from 24 August 2015 low to 28 August 2015 high projected from 29 September 2015 low and the upper boundary of the ascending channel (in orange) in place since 29 September 2015.

Key levels (1 to 3 days)

Pivot (key support): 2095/2089

Resistance: 2115 & 2138

Next support: 2071 & 2060

Conclusion

Technical elements are still positive and yesterday’s initial sell-off in price action and the challenge on the 2095 pivotal support is considered as an excess. As long as the 2089 (excess) daily pivotal support holds, the Index is still likely to shape another round of potential upside movement to target the 14 August 2015 high at 2115 before the 2138 significant medium-term resistance.

On the other hand, failure to hold above the 2093 pivotal support is likely to damage the uptrend to trigger a further slide towards the next support at 2071 and even 2060 next.

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