Tuesday bullish reversal suggested strongly that the S&P 500 index is ready for another test of the important sentiment 1100 level. Although several near-term technical factors suggest that the bulls are holding the edge for a short-term corrective rebound, the index needs to breakout above 1100 and move higher before there is any real prospect of a change in the major downtrend pressure.
several key technical factors suggested that the bears are holding the edge for a medium-term corrective mode, which is taking place within a context of a long-term uptrend. This increases the odds for a test of the important sentiment 1000 level in the S&P 500 index. The market however, is extremely oversold after Tuesday decline so we should expect at least a short-term consolidation prior to a new down-leg.
recent trading actions in the S&P 500 index suggested strongly that further pullback consolidation likely. What this means is that the index may have to retest and hold above the May-June lows before the bulls can regain the need strength for another attack on the important sentiment 1100 level.
the Standard & Poor’s 500 Index failed in its third attempt to take out the formidable point of resistance near 1105. Staying below that level might herald more losses.
the S&P 500 index is now extremely oversold as it tests key support levels. While the oversold condition is the essential precursor to a technical rebound, it’s not a sufficient condition for the launch of a new upleg. So unless there is a headline that everyone recognizes as extremely bullish or Money Flow measure starts to rise rapidly, rebound should be limited.
