S&P500 INDEX - US500 - What is next? - 05/23/2016 (GMT)

The US500 index has been trading within a clear negative primary trend, establishing clear lower highs and lower lows since mid-April. The index traded uneventfully for a second consecutive day, ending the week pretty much flat around the 2050 region, although it fell intraday down to 2024, a fresh monthly low. However, this downward move which started following the failed attempt above the 2112 level can be translated as a technical correction of the upward trend in the long-term.

With the above in mind, the existence of a possible trend-line and moving average break, coupled with clear divergence points to a potential for the index to move into a more bullish phase. The weekly chart highlights the clear level of support derived from the 200-SMA and the 38.2% Fibonacci level, near the psychological level at 2000. In the past, the ability of the index to remain above this long term average whilst establishing consistent higher highs has provided confidence of an extension to the upside. This gives a more bullish outlook to the index that has been moving lower for around 3 months. Going forward, I will be watching the breakout very closely as this could provide a clue as to which direction the index is set to move in the coming days. The 2060 region will be the key to watch to the upside. So, a break of these obstacles would strongly suggest there’s been a change of bias in the markets.