SPX500 Technical Analysis, September 25, 2020

Exclusive Markets Analysts
Exclusive Markets Analysts

SPX500:


Technical Outlook:

SPX500 remains in control of bears since printing highs at 3588 levels early September 2020. The indice has dropped through 3200 mark before pulling back yesterday. Bears remain poised to remain in control and push lower towards 2500, 2300 and beyond over the next few weeks.

SPX500 probable wave structure is as follows: The indice seems to have terminated a larger degree Wave ((4)) around 2200 in March 2020. Since then, bulls remained in control and managed to push through 3588 highs, sub dividing into 5 waves.

The above impulse rally between 2200 and 3588 might be seen as a larger degree Wave ((5)) termination. If the above is correct, SPX500 should be preparing to reverse and produce a corrective wave at a similar degree. Bears might be looking to push below 2200 mark as well.

SPX500 lower degree wave counts are suggesting the following. The drop between 3588 and 3200 could be either marked as lower degree Wave 1 or it is possible that Wave 1 terminated around 3300 lows earlier. In that case, a potential Wave 2 terminated around 3428 mark.

If the above lower degree counts are correct, a potential Wave 3 might be under way since 3428 levels. Any pullback rallies should remain well capped below 3428 and reverse lower again. Alternately, SPX500 could rally towards 3430 mark again to terminate an expanded flat.

Either way, the indice remains an excellent case of selling on rallies through 3420/50 mark from here on. It should remain below 3588 mark for several weeks to come.


Trading Strategy:

Short against 3588, target below 2200.

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