sp 500 daily outlook thurs 17 mar 2016 right below 2040 risk level for a potential decline 180231201

(Click to enlarge charts)

What happened yesterday/earlier

The U.S. SP 500 Index (proxy for the S&P 500 futures) has pushed higher into the 2030/40 “risk zone” after the U.S. Federal Reserve (Fed) announced the median updated interest rate hike projections has been reduced to only 2 rate hikes for this year versus an expectation of 4 hikes in the December 2015 meeting.

The Fed “dot plot” of interest rate projections will be updated every quarter and the next projection will be released in the 14/15 June 2016 meeting. In yesterday’s concluded meeting, market participants are expecting a reduction in the projected interest rate hike to 3 rather than 2 for 2016 and the more dovish tone is due to weaker global growth and heightened risks seen from the financial market turmoil in early February 2016.

Key elements

Current price action is now right below the upper limit of the risk zone at 2040 which is defined by the upper boundary of the bearish “Ascending Wedge” and a Fibonacci cluster. For more details, click over here as per highlighted in our latest weekly outlook/strategy.
The 4 hour Stochastic oscillator has reached its extreme overbought level which suggests limited upside potential at this juncture as the on-going upside momentum in price action appears to be “overstretched”.
In the internal state of the U.S. stock market, the best performing equities class since the start of this countertrend rally from 11/12 February 2016 low is the small caps firms which is represented by the Russell 2000 as it soared by 15.91% beating both the Nasdaq 100 (+12.93%) and the S&P 500 (+12.09%). However, yesterday’s “dovish push” by the Fed was not able for the Russell 2000 to make a new high yesterday (remained below its 03 March 2016 high of 1094 where else both the Nasdaq 100 and S&P 500 ascended higher to form new highs). This observation suggests a “subtle weakness” in the internal state of the U.S. stock market as money flow has been reduced in the current outperformer, the Russell 2000 which implies yesterday’s push up seen in the S&P 500 (even though in made a new high) may not enough “strong legs” to push it higher.
The first short-term support stands at 2004 which is defined by the 16 March 2016 minor swing low area that was tested 3 times in the past in 08 March, 10 March and 15 March 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 2040

Support: 2004 & 1970

Next resistance: 2081

Conclusion

As long as the 2040 pivotal resistance is not surpassed, we maintain our bearish stance that the Index is due for a potential multi-week decline to retrace the on-going countertrend rally start started from 11 February 2016 low of 1807 with the first potential short-term downside target set at 2004. Only a break below 2004 may trigger a further decline towards the next support at 1970 (the swing low area of 11 March 2016 that has tested the previous swing high of 26 February 2016).

However, a clearance above the 2040 pivotal resistance is likely to invalidate the expected bearish scenario to see an extension of the countertrend rally towards the next resistance at 2081 (the descending trendline that has linked the lower lows of the impending “Double Top” since the current all-time high of 2138 printed in May 2015).

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.