S&P 500 Index advanced to a new record high at 1991.39
(24 July 2014) (near the rising wedge resistance on the monthly chart in log
scale) before consolidating. (please refer to the monthly chart in the prior
post.)
Near term, with potential negative daily RSI divergence from
the price (linking 1985.59/1991.39 highs) and MACD below the signal line, there
is scope for prolonged consolidation within the 4-1/2 week rising wedge
(linking 1985.59/1991.39 highs and 1944.69/1955.59 lows on the daily chart). If
the 1991.39 peak manages to cap near-term, the index would retest the 1952.86 higher
low near the 50 day moving average currently at 1950.24 which may contain
pullbacks.
A move back above 1991.39 is needed to complete a higher
base and signal resumption of broad uptrend towards the 2000.00 psychological
level). Above there would open the next Fibonacci target at 2047.41 (projected 666.79/1364.56
from 1074.77).
On the downside, if the index breaks below the 50 day moving
average, it would suggest near-term topping and trigger further weakness
towards 1944.69. Below lies the 1925.78 and 1902.17 near the bull channel
support (from June 2013 low).
Strategy
Buy on pullbacks to 1950.00 area
Stop below 1950.00
Target 2000.00
Sell on rallies to 1944.00-1950.00 area
Stop above 1950.00
Target 1900.00
S&P 500 Index daily
