After a 3½ month consolidation, with some violent moves in both directions, the S&P 500 index has finally broken out to the upside, with a significantly higher target now in place. This is good news for the JSE that tends to follow the US stock market.
S&P 500 INDEX – New breakout
Recommendation: BUY
Current Trend: Short-term up. Med-term sideways. Long-term up.
Strategy: Buy on a one or two day pullback for ongoing upside.
(Daily)
Chart Setup: After finding support at its 200-day moving average a few times, the S&P 500 index has broken out above first line 2 resistance, and now line 3. This is very positive news for US and world stock markets, including the JSE. Lines 1 and 3 form a symmetrical triangle, with a higher target now in place.
- Its short-term Stochastic (on top) is overbought so a minor pullback is very likely before it heads higher.
Strategy Details: Buy it on a one- or two-day pullback.
Target: It is now targeting 2 980 over the coming months, based on the height of triangle 1-3 projected up. (It was at 2 730 at the time of writing).
- To the downside, closest support is line 2 at 2 684.
Stop-loss: A closing price below 2 650.
- Colin Abrams is an independent technical analyst. To subscribe to more recommendations by the author, or attend trading courses, please go to www.themarket.co.za
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