The S&P 500 cash index (SPX) closed at 1321.15 on Friday, net weekly gain 1.27 points week-over-week, up about 0.09%. But from Monday’s open to Friday’s close, SPX actually had a small loss. The SPX took a week-long roller-caster ride as the oil price surged.
The monthly positive seasonal bias ended last Friday. This week is a roll-over week, and the March contract (ESH11) will roll over into June contract (ESM11) on Thursday. Volatility will increase and wild moves should be expected.
SPX Weekly chart
Technical analysis
Based on SPX weekly chart (above), SPX is struggling with the key levels between 1300 and 1333. It failed to exceed the March 1 highs in the last two days of trading, which indicates that some potential bearish bias is being built into the price.
For long and intermediate term, there is no selling signal given. Many momentum indicators continue to move slowly into overbought territory, but are still supporting the major uptrend.
From the long and intermediate point of view, the small short-term pullback or correction should still be considered a healthy retracement in a continuing bull market.
For the recent SPX movement, as long as 1314 and 1300 don’t give up their support, the price will continue jiggling and struggling to make new highs. A failure to make a new high will lead to a sideways move.
Only a break under 1294 will convince the odds that the price wants to work lower to the 1288-1275 range.
While the SPX still moves sideways, we should remember that the current movement could also be regarded as the very earliest stage of the start of the next declining move.
That doesn’t mean this market will tank right away. It needs time to digest the last bullish behavior and convince people to accept the first bearish tone.
It is a process of transition. In similar circumstances in 2007 it took 6 months for the SPX to reach the max high 1586.
Monthly resistance 1350 and support 1250; Weekly resistance 1345 and support 1275
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