S&P 500 and Dow Jones beating target levels
Two weeks ago I wrote: ‘The E-mini S&P 500 finally beat strong resistance at 2510/20 and minor resistance at 2535/40 as we headed towards strong resistance at 2556/59. We should struggle here but we may only pause. Short positions could be risky. A break higher targets minor resistance at 2571/74. On further gains look for 2582/84 then 2592/94.’
All the targets have now been hit so it’s time for an update. I had expected the market to reverse from strong resistance at 2600/2620, arising from the neckline to the head-and-shoulders and blue 100-week moving average as you can see in the weekly chart below.
However this was not the case and the index really had no trouble breaking through what I’d expected to be very strong resistance. As a result the bulls clearly remain in full control despite the severely overbought conditions on the daily chart.
Note how we have sailed back above the green 100-day moving average at 2605. Even the bearish dead cross (100-day moving average crossing below the red 200-day moving average) is being ignored by traders and investors.
E-mini S&P bulls must hold prices above the first support at 2625/20 of course to re-target 2636/37 and 2640/45, which was the high on Thursday. A break higher is likely eventually in the bull trend, targeting 2649/50 and 2653/55, perhaps as far as 2659/61. On further gains look for 2669/71.
The key support is at 2625/20. Long positions need stops below 2610. A move below 2600 is more negative with a weekly close below here tonight needed to prove the break higher was false.
Focus on the Dow
I also wrote: ‘The E-mini Dow Jones meets key resistance at 23600/620. Short positions need stops above 23700. A break higher targets 23870/890.’
The E-mini Dow Jones broke higher and is now well above 24000. In fact it is beating what I saw as strong resistance at 24200/230.
Having hit the next target of 24460/480, as you can see in the weekly chart above, we are testing the 11-month lower trendline of the channel that we broke out of a month ago. This resistance is at 24510/520. Bulls obviously need to see a weekly close above here tonight to target 24600/620, perhaps as far as 24750/760, before quite strong resistance at 24850/870.
I thought it was worth a look at the daily chart but there is no dead cross here just yesterday, although the blue 100-day moving average is slowly approaching the red 200-day moving average.
In the short term we have minor support at 24345, then strong support at 24280/260. Further losses however target 24180/170. Look for an excellent buying opportunity at 24030/000.
Technical Analyst & Trader
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