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    Technical Analysis SP500 : 2015-07-27

    Another attempt to escape the trend

    We would like to consider again the American S&P 500 index CFD, denominated in dollars. It has been traded in a range for almost a year, showing a slight increase of 0.5%. Meanwhile, yesterday Chinese stock market fell to its 8-year lowest. Investors were disappointed that the unprecedented economic stimulus measures, proposed by the government, have not yet produced the desired effect. Cheap oil also put additional pressure on Chinese stocks. National companies aggregated earnings unexpectedly slipped 0.3%, while analysts expected them to grow 0.6%. Shanghai SE Composite plunged 8.5% on Monday, driving down Dow Jones Industrial to a 5-month low. We suppose that S&P 500 may retreat as well. It is worth mentioning that it is traded with the current profit/earnings annual ratio of 16.9, which is above the 10-year median value of 14.7. A regular Fed meeting will take place on Wednesday. The information concerning the probable rate hike may have a negative impact on S&P 500. The second quarter GDP will be released in the US on Thursday, resulting in volatility change, the GDP is expected to rise 2.5%.

    SP500

    On the daily chart S&P 500 is traded in a range. The Parabolic indicator shaped a sell signal. Despite MACD bars have a low amplitude, they demonstrate a weak bearish signal. RSI-Bars has not yet reached the oversold zone. Bollinger Bands expanded, indicating volatility growth and current trend strengthening; they have also a negative slope. The bearish momentum may develop if another S&P 500 bar closes below the 200-day Moving Average, the Bollinger lower boundary (2042) and the fractal lows that act as the neutral trend support line. A stop loss may be placed above the Parabolic signal and the fractal high, forming the trend upper limit at 2132. After pending order activation the stop loss is supposed to be moved every four hours to the next fractal high, following Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most cautious traders are recommended to switch to the H4 time frame and place a stop loss there, moving it after the trend. If the price reaches the stop loss without triggering the order, we recommend to cancel the position: the market sustains internal changes that were not considered.

     

    Position Sell
    Sell stop below 2042
    Stop loss above 2132

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