SPX500 Structure Remains Bearish Against 3400

16 July 2020

SPX500 spot prices managed to print just above its June 09 highs yesterday. The previous high was around 3233, while yesterday’s high was registered around 3238 before the indice reversed. The futures are trading low at 3212/15 and looking to drop further.

Immediate support is seen around 3100 mark and a break below that would confirm that the indice has reversed towards the larger trend, which is down. Also note that prices would break below the trend line support as well, entering into the sell zone.

We have re-adjusted the counter trend rally termination point Wave C from 3233 to 3238. Please note that SPX500 can push further towards 3254 levels, before resuming lower again. Having said that, a break below 3100 from here would confirm bears are in control.

Let us have a re-look at the larger degree wave counts (not seen here). SPX500 had dropped from 3400 through sub 2200 levels, sub-dividing into 5 waves, an impulse wave. This has been labelled as Wave (1) on the chart here.

An impulse drop should be followed by a corrective rally in ideal condition. SPX500 had produced a corrective rally from sub 2200 levels through yesterday’s high at 3238 respectively. Or the counter trend rally could terminate close to 3254 levels.

The above termination could be seen as Wave (2) of the larger degree. If the above proposed structure holds well, SPX500 should stay below 3400 and turn sharply lower towards 2200 and further, going forward.

Prepared by
Technical Analysis Team

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