S&P 500: Next Upside Targets – Week Starting 22nd May (Technical Analysis) (SP500)

Final week’s article was titled, “Rested and Able to Break,” and the S&P 500 (SPY) duly broke. Bulls had been all over the place: the Nasdaq (QQQ) made new 52-week highs, the Nikkei (EWJ) broke above its 2021 highs, the Dax (EWG) made new all-time highs…even the US greenback rallied.

Longer-term, the break to new all-time highs within the Dax and different inventory markets does beg the query of whether or not a sustained new bull market is underway. The reply to that is past the scope of this text, which is primarily involved with the week forward, however I’d briefly say these inventory markets are most likely not in a new bull market and moderately in a protracted finish to the earlier bull market (trace: search for a wedge to type).

However what of subsequent week and the breakout? The place is the S&P 500 heading?

To reply that, a wide range of technical evaluation methods shall be used to have a look at possible strikes for the S&P 500 within the week forward. The S&P 500 chart shall be analyzed on month-to-month, weekly, and each day timeframes. I’ll then present my very own conclusions and make a name for the week forward. My calls might not at all times be right, however they are going to be based mostly on stable proof and made with out bias.

S&P 500 Month-to-month

The month-to-month and quarterly charts have offered a bullish bias all through the latest uneven interval within the decrease timeframes. Simply after the Q1 bar closed, my April third article concluded, “New highs above the Q1 excessive of 4195 appears to be like probably earlier than any reversal.”

Sadly, now this sign has performed out, it’s not of any use. However that is to not say a reversal is imminent and so long as the month-to-month bar for Might closes over 4170, the bullish bias will stay.

The following resistance is at 4325 on the excessive of August.

The primary respectable help is the VPOC round 4130, then 4048-49.

An upside Demark exhaustion rely is on bar 5 (of 9) in Might.

S&P 500 Weekly

This week’s 4192 shut is the best for the reason that October ’22 backside. It was barely off the excessive of the week of 4212 so instant follows by will not be a given, however there’s a clear bullish bias. The rally is now testing the weekly hole within the 4203-4228 vary and may push by.

Hole fill at 4228 might stall the rally, however the subsequent main targets are the 61% Fib retrace of the 2022 bear market at 4311, with the August excessive of 4325 simply above.

Final week’s low of 4098 is the primary help, then 4048.

The upside (Demark) exhaustion rely has reset and shall be on bar 2 of 9 subsequent week.

S&P 500 Day by day

The coiling and breakout over 4135 was textbook, and the rally ought to now proceed to the inverse head and shoulders goal of 4280. Shallow dips equivalent to Friday’s transfer are wholesome so long as they don’t develop right into a reversal sample on subsequent bars.

4150-51 is preliminary help. Under there, there may very well be a bounce on the 4135-breakout stage, however the rally could be compromised and would probably return to 4090-98. The 50dma will rise to the 4090s subsequent week, including help there.

Preliminary resistance is 4212-28.

An upside Demark exhaustion rely shall be on bar 3 of 9 on Monday, so no exhaustion indicators are potential subsequent week.

Occasions Subsequent Week

Knowledge is on the sunshine aspect subsequent week. Claims and prelim GDP are out on Thursday, with Core PCE Worth Index on Friday. Whereas a June hike nonetheless appears to be like unlikely, particularly after Powell’s feedback on Friday, yields are on the rise once more. Sturdy financial knowledge will gas the yield rally.

Debt ceiling negotiations will proceed as the primary driver. The market will wish to see extra concrete progress by Friday because the X-date attracts close to.

Possible Strikes Subsequent Week

Continuation of the rally appears to be like probably. The weekly hole fills at 4228 might create a pause, however the 4300 space stays the goal. I’ll search for bullish motion to proceed – small dips (20-30 factors) are wholesome, particularly in the event that they happen across the open and result in a powerful shut close to the highs of the session.

That mentioned, there may be by no means room for complacency. A weak shut beneath 4150 would warn that every one will not be properly, and I’d then search for a pointy drop to flush out late bulls. This may probably spike beneath 4098, however would in the end be one other alternative to purchase, as I don’t assume the highest is in and 4300 ought to nonetheless be reached someday this quarter.