sp 500 daily outlook tues 08 mar 2016 approaching 197063 support for potential final upleg 180070201

(Click to enlarge charts)

What happened yesterday/earlier

In our earlier short-term daily outlook/strategy posted last Friday, 04 Mar 2016 (please click here for a recap), we have highlighted that the rally seen in the U.S. SP 500 Index (proxy for the S&P 500 futures) is coming close to a short-term risk zone of 1994/2003 (excess) where the Index is likely to shape a pull-back/consolidation.

The Index has surpassed the 2003 excess level slightly in the U.S. session on 04 Mar 2016 (printed a high of 2009) after the release of the latest U.S. nonfarm payrolls data for February 2016 and staged the expected pull-back thereafter in yesterday, 07 March 2016 session after an attempt to break above 2009.

Key elements

Current price action has continued to inch lower from yesterday U.S. session high of 2006. The lower boundary (support) of the on-going bearish “Ascending Wedge” configuration stands at 1970 which is also the former minor swing high area of 26 February 2016.
The hourly (short-term) Stochastic oscillator still has a bit of room left for further downside before reaching its extreme oversold level. This observation reinforces a potential dip in price action towards the “Ascending Wedge” support at 1970.
Right below the 1970 support will be the 1963 level which is defined by the 23% of the current countertrend rally that started 11 February 2016 to last Friday high of 2009 and the former swing high area of 26 February 2016.

Key levels (1 to 3 days)

Pivot (key support): 1970/63

Resistance: 2009

Next support: 1922

Conclusion

Short-term technical elements suggest a further potential dip towards the 1970/63 pivotal support before the Index stages the potential final upleg of the on-going second phase countertrend rally to retest last Friday minor swing high at 2009.

On the flipside, failure to hold above the 1970/63 pivotal support is likely to invalidate the last push up scenario to see the start of a deeper decline to target the next support at 1922.

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