The cash S&P500 formed a downtrending day on lower volume Tuesday. What I believe will be a short, shallow pullback continues from Monday’s high.Today’s chart shows yesterday’s low at a Fibonacci 23.6% retracement (dashed horizontal line) of the move from the July 15 low. If the decline continues past this natural support level then the next area of support is 1273-1276. Please note that the August 8 low of 1262.11 is now a price fractal so that the current support line (bright green) has steepened.
The Wilder Directional Movement System is long from 1297.85 while the Parabolic SAR is at 1269.26. A price drop below that level (which would also be below the current support line at 1273.11) is not expected but would put my under-development trading system in a short position.
Once the uptrend resumes the first target is at 1320-1322 and I would not be surprised to see that level by early next week. A stronger band of resistance can be found from 1343-1351 but I am beginning to think we will not hit that without an intervening correction first.
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