ES1 (SP500 Generic Front Month) – 8.29.23
*I have been off the desk for a so let’s recap the last few days and reports. I noted on Aug 18 that a doji reversal stick had formed. After confirmation on the next trading day (Aug 21) I shifted my view to neutral expecting some upside “rebound” off the Aug 18 low of 4350. The expectation at that time was for the index to test resistance at the 10dma (R10), 50dma (R50), 4460 and 4500. As expected, the index has essentially tested and is working around these levels currently. Momentum (M1, M2) has improved but remains negative. I see the near term support/resistance levels to focus on as 4400/4486 (50dma). I would maintain neutral for the short term and will continue to watch price action and internals.
Repeat: As a very important note, the longer term set up for the index is shifting to negative as momentum for the Weekly period has shifted to negative for the first time since Nov 2022. In my opinion this is a significant development and one that should be considered as a warning sign for the intermediate/longer term health of the index.
Trading Support:
- 4412: 10dma
- 4400: Previous Support
- 4350: Recent low/support
- 4346: 100dma
- 4300: Previous Resistance
Trading Resistance:
- 4460: Previous Support
- 4486: 50dma
- 4500: Previous Resistance; 76.4% Retracement Level
- 4550: Previous short term support
- 4631: Mar 2022 Peak
Chart 1 (ES1 Daily Bars)
Source: Bloomberg and Scotiabank Est
