- Last week, we saw a strange trading week. SP500 broke key 1825.84 and then set new high 1850. The rise of SP500 last week was reinforced by positive data of US economy. We should thank to good retail Sales and CPI .
However, that is the problem of last week , we should pay attention to this week.
No major economic data of US are released this week, so we think SP500 couldn't find the dynamic to rally this week.
This's time for correction.
The biggest problem of SP500 is that its advance depend greatly on FED taper decision. Recently, we saw SP500 tried to escape from the influence of FED taper decision.
Usually, if FED taper warmed up, SP500 was sell off and vice versa, but everything gradually change. SP500 rally despite of FED taper. This is explained due to US economy recover very well, so SP500 can stand on its foot despite of FED taper.
Next two weeks is FOMC Minutes, most likely FED will continue to taper gradually as they said, the advance of SP500 will be decided in that Minutes.
We have following levels now:
- The high 1849.56 : strong .
- 23.6% Fib retracement: 1823.85.
- 38.2% Fib retracement : 1808.71 : strong .
We saw SP500 may form pattern if we choose the odds of SP500 this week is downtrend.
Moreover, when we check and indicators, we saw a strong divergence between indicators and price.
This is the strong SELL signal.
In my opinion, I think at least SP500 will test 1823.85 level next week, and in the worst screen, it will reach 1808.71 level. I ignore the uptrend means set up new high.