End of the Week Technical Setup for the S&P 500

End of the Week Technical Setup for the S&P 500

Earlier in the week we identified the 2471 to 2473 area of the S&P 500 futures as a zone in which we thought resistance could occur. The ESU17 printed a high of 2476.50 yesterday, but now finds itself back below this resistance area, and is currently testing the trendline that was established from last week’s low to this week’s low.

End of the Week Technical Setup for the S&P 500
End of the Week Technical Setup for the S&P 500 Getty Images

We tend to think that with the S&P 500 up 10 days in a row, and with momentum stalling out yesterday, it may be time for at least a small pullback. This market has been higher every day this week, and today provides an opportunity for end-of-week profit-taking.

Therefore, we expect the S&P 500 futures to break the green trendline on the chart below, which currently comes in at 2470.50.  The first lower target would be yesterday’s 2465.50 low; we see this area as a good place to cover some bearish positions.  However, the ultimate target would be the 2461 area, noted by the blue line on the chart.

End of the Week Technical Setup for the S&P 500

The prior all-time high, 2461.50, near the same blue line, is an area which once offered some short-term resistance; and we expect that on first touch, this level will offer support. Therefore, we would look to close any bearish positions here with the intention of opening bullish positions in this market.

We often note that we like to buy dips.  However, next week our conviction decreases.  With the month of July coming to a close, we speculate that there could be profit-taking, and if by chance a pullback to the 2450 to 2440 region should occur (shaded in gray), we would look at that as a very strong buy area.

The only item on today’s economic calendar is the Baker-Hughes Rig Count at 1:00 p.m. ET, which should not be a difference-maker in the equity index markets.

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