The S&P bulls have had a very good run the last few months, producing a very nice stable up trend. Recently the market has lost it’s upward momentum and appears to be ‘running out of steam’. The mean value has flattened out and is showing characteristics of a neutral market.
The market is clearly having trouble moving past that 1978.50 level. Last session a bearish rejection candle signal was produced when price tried to move through it, and ended up closing much lower than the open price for the day.
The market looks like it’s flattening out and could potentially tip over here. The weekly chart suggests a bearish correction really is needed as price sits too high off the mean value. If price breaks the lows of the bearish rejection candle, we could see this market turn bearish as it starts trading on the negative side of the mean.
The S&P Tanks Off Resistance
This week we looked at the possibility of the S&P producing a market top. The daily timeframe clearly shows the market struggling to move past a resistance level for a couple of weeks. The candles started to clutter up like cars in a traffic jam suggesting the market didn’t have what it took to move price higher.
A few bearish price action cues suggested we were going to see more weakness in this market. The fact that the market had flattened out and started to drop bearish pin bars. The weekly chart shows the markets to be over extended from it’s mean value, suggesting a correction is due.
The signalling candle offered both the retracement entry and breakout entry option. Once the market started breaking past the lows, the selling intensified and produced a large bearish power candle. We’re still seeing some bearish follow-through today, but it’s probably a good idea to take the money off the table now before the NFP release.
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