I have reviewed the high-level plan for the S&P500 for the Mid-Week update of this week which I typically share only with my newsletter subscribers. Only for today I am sharing the plan on the blog, as well.
The SPY ETF and the S&P500 e-mini (ES) index are offering discording views on whether the market has support below recent November lows. I am sticking to the S&P500 e-mini (ES) price and bulls defended the 1332-1358 area in this market. So I will consider the S&P500 e-mini futures contract bullish because bulls were able to defend the 1332 level. This causes Program Trading to look for targets above recent highs. This view is also in line with what we have in the Euro-Dollar cross, considering that the S&P500 and the Euro are trading in the same direction so far (no divergence).
Price kept moving higher in the last few days and a small correction now seems in the card. I could identify two scenarios for the S&P500 (please refer to the below picture ).
Scenario 1: price keeps trading in extension longs and bounces off the 1423 area, staying above the 1419 (as I write futures market has opened with price right at the 1419.50 level).
Scenario 2: price retraces to the traditional support at 1410 and then bounces off the level into the 1450 area. Notice also that below 1404 a continuation lower into the 1390 area is also possible.
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