SP500 broke previous all time high earlier this month when breaking the 2135 level . Previous high dated from May 2015 and was « tested » 4 times since then by 20p or less.
The fact that the previous highs were eventually crossed is of significance on a technical point of view. The 2135 previous high will now act as support in the near future.
There are 2 possible scenarios from here :
- 1/ As SP500 (like other US indices ) are overbought , one could attend a consolidation around current levels and possibly 1,5% to 2% correction for a retest of 2135. Once overbought situation would be alleviated upside could prevail again for another 4 to 6 % to 2250 -2300.
- 2/ SP500 does not hold recent gain and 2135 level is quickly recrossed on the downside (closing basis) ; the early july break
would be called a « fake break » which historically are very negative patterns in tech analysis. A 5 to 10 % correction minimum would likely follow.
Based on this chart and for the time being long at best and consolidation at worst prevail . 2135 IS KEY LEVEL. You can note on the chart that trend indicator (MACD) is in the process of crossing on the downside.
If we look at measures of investor sentiment (Daily sentiment index – US futures traders ), situation is very extreme
on the positive side with DSI well above 85% which is the highest level in 2 years . Such readings in the past matched with 4% minimum correction within days.