On Tuesday, the S&P 500 tested support at the lower trend-line we discussed yesterday. On Wednesday, this broader market index bounced up to test the upper trend-line, which we also happened to discuss yesterday. Will the S&P 500 break through the resistance at 1495, or will we revisit the lower trend-line one more time?
It is my personal belief that the S&P 500 should finish the week ending on May 4 at a lower price than it closed on Friday, April 27. This is because I think it would be most logical for the market to assume a formation like the one I posted on April 30. In order for this to happen, we need a down week.
This would suggest that Wednesday's encounter with resistance at 1495 on the S&P 500 will not be followed by a Thursday breakout. Instead, it would suggest that the market will somehow move lower over the course of the next two days.
This would make sense from a wave count perspective because it would create a three-wave corrective structure. The chart depicts that scenario. I think it is important to note that the lower trend-line that served as support on Tuesday has extended up to 1486.48 on Thursday. This may well serve as support again over the next two days.
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