In recent articles we have maintained that we favor buying pullbacks in this higher-trending market. We continue to hold to that view this week, and believe that since today is the first of the month, it is possible that equity inflows will support this market.
On the chart below, the green price marker is at 2469.00. A tick below that is the 50% mark of last week’s range, and a tick above is the weekly pivot. We like this for our bias marker and feel very bullish above this level. Below this level we feel moderately bullish.
The blue trendline is drawn from last week’s low and is connected to the series of higher lows since then. We think this trendline is a fair spot to establish a bullish position in this market.
The grey shaded region on the chart marks an area that was once resistance but has now turned into support. This is our “last stand” area for the week. We believe that if price trades to this area, this is where bulls must hold.
To the upside, the levels marked are targets with what we may consider to be slight resistance. If we use any of the levels to take a bearish position, it would be with smaller size because we would be trading against the trend.
The first upside target is last week’s 2480.50 high, which is an all-time high, followed by the trendline in orange which has offered beautiful resistance. For the next weekly target, we are keeping an eye on the 23.6% extension of last week’s range, which comes in at 2486.00.
Today, traders should pay attention to the economic calendar, which includes:
PMI Manufacturing Index 9:45 AM ET
ISM Mfg Index 10:00 AM ET
Construction Spending 10:00 AM ET.