S&P Could Signal Extended Downward Trajectory

recent trading actions leaving the market in what looks to us like a back-and-forth consolidation of the late June massive rally. As the S&P approaches critical tipping point, we’re watching the next sell signal. The index could signal an extended downward trajectory, depending on how it closes over the next few days.

S&P Vulnerable to Downside Retracement

we wouldn’t look too much into Tuesday action because it keeps S&P within its one-week pennant trading pattern. The period of consolidation has helped alleviate widespread short-term oversold conditions. We remain near term neutral/negative for S&P as we believe market vulnerable to some downside retracement.

S&P Shifted to Sideways Trading Pattern

market internal deteriorates as S&P works off short-term oversold conditions. Nonetheless, we do not expect any big swings ahead of the FOMC decision on interest rate, which is scheduled to release next Wednesday. Our near-term technical bias is that for the near-term further consolidations could be unfold between 2124 and 2166. Short-term traders could play the range but markets are volatile and traders may prefer not to hold large positions overnight.