The S&P 500 cash index (SPX) closed at 2126.41 last Friday, down 14.75 points for a 0.68% net weekly loss. Big deal.

The market is dead, waiting for the ugliest presidential election in living memory to finally reach a conclusion just eight days from now. And for anyone who trades equities or futures, it can’t happen soon enough.

Today is the last trading day of October, and for the month until now the total range is about 55 points, For the previous month it was 67 points. For the month before that – when we made a new all-time high – it was 46 points.

And it is all just moving back and forth across the same territory. Friday’s close was 50 points below where we were three months ago. This market is paralyzed, waiting for the politics to play out before it decides what to do next.

Under these circumstances there isn’t much point in trying to read the next moves. The front pages will be filled with the election until it is finally over, and the markets will jump with every squiggle, as they did last week, when the news flow stopped a promising rally cold and turned it into a loss.

We can tell you where the support and resistance lies, where the market is likely to go when it break up or down, and where the most likely place are for it to either reverse, or break new ground.

But until the election is over the uncertainties – the known unknowns, as an important government official once said – are going to keep the serious money on the sidelines.

You should be too. Buy a bag of popcorn and watch the show; this is no time to have money at risk.

This week

The long-term trend is still up. The intermediate term is neutral. The short-term action will be whipped back and forth with every new scandal.

Until Friday the S&P500 index was basically producing another sideways week. But the latest campaign bombshell from the FBI has shaken the conventional wisdom that Hillary would win. That now appears less certain, and markets hate uncertainty.

The short-term outlook is bearish, even though the index is holding the price above the June breakout zone.  2117.50 will be a key line for this week. Closing below that level could begin a selloff.

In the event the 2100 level fails to hold up, the next major support is lying around 2060-2050. The index could pause at the 200-day moving average line, but eventually 2060-2050 should be the final target for a shakeout move.

Today

For the S&P500 futures (ES)

Today the ES is likely to retest last Friday’s range first. It could go up to 2129.50-33.50 if overnight trading holds above 2119.50-20.50 zone. Overnight the ES spiked down to re-test 2112 but bounced back quickly.

 

A sustained move below 2117.50 could move the ES below last Friday’s low and lead the price towards 2106-2100 zone to test June’s spiking low area.

 

Daily PMO indicator went further down last Friday, and STO indicator also points out internal weakness. Both hint at short-term bearishness.  

 Major support levels: 2106.50-07.50, 2100.50-2098.50, 2089-88, 2075-73

Major resistance levels: 2152-55,  2162-64,  2171-72.50, 2181.50-78.50

For more timely, professional market analysis, visit www.naturus.com. It’s free.

 

Chart: S&P500 cash index (SPX) Oct. 28, 2016. Daily chart.

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