Upward trades in stock indices increasingly risky
The easy upward trades in stock indices of recent months are probably nearing an end. The remainder of the week might present a modest upward move, but Elliott wave counts and cyclic considerations suggest the market is approaching a precipice.
The intraday (130 minute) chart for the S&P 500 Index would look better with a minor new high over that of Tuesday. However the downside risk is increasingly dire, so traders should monitor any long trades very closely this week and next. We believe conditions will start favouring downward trades soon.
It's also possible the S&P completed its ascent on Tuesday, in which case we'd watch the retracement resistance levels at 4,216 and 4,224 for a reaction.
Short trades should become easier after the minor support at 4,170 breaks. If a decline starts gaining traction, then the first major support zone waits near 3,966 and 3,934.
Compared to the S&P 500, the Dow 30 has shown much less enthusiasm this year. It appears to be trying to roll away from the lower high it printed on May 1. Any upward move this week should be treated as merely a retracement, and it will probably discover resistance near 33,250 and 33,430 as shown on the intraday chart.
The first major support zone for the Dow 30 sits near 31,310 and 31,080.
Both the S&P 500 and the Dow 30 are approaching inflections of their medium-length cycles shown in blue on the charts. With the Dow, the slower 62-day cycle is already lending an advantage to bears.
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