S&P 500 bulls get some action at last

The S&P 500 on the D1 time frame was in a long down trend that started at the end of August. A last lower bottom formed on 13 October at 3492.4.

A closer look at the Momentum Oscillator reveals a positive divergence between point “a” and “b” when comparing the lower bottoms at 3581.7 and 3492.4. This could have alerted technical traders of a possible momentum reversal.

After the lower bottom at 3492.4, the bulls showed that they were hungry for action after the long downward stretch. The price broke through the 15 Simple Moving Average with the Momentum Oscillator following suite by breaking through the 100 baseline into bullish terrain.

A possible critical resistance level formed on 18 October at 3768.1 with the bears then immediately trying to take control of the market again.  On 21 October the price failed to go lower when it found support at 3633.4 and  a higher bottom was confirmed.

On 24 October the S&P 500 broke through 34 Simple Moving Average as well as the critical resistance level at 3768.1 and three possible price targets could have been considered from there. Attaching the Fibonacci tool to the top at 3768.1 and dragging it to the bottom of the support level at 3633.4, the following targets may have been calculated. The first target was estimated at 3851.3 (161.8%) and this was reached on 25 October. The second price target could be likely at 3986.0 (261.8%) and the third and final target may be anticipated at 4204.0 (423.6%).

If the support level at 3633.4 is broken, the above scenario is annulled and care must be taken to manage any open risk.

As long as the bulls continue to control the market and demand overcomes supply, the outlook for S&P 500 on the Daily time frame will remain bullish.