S&P500 Futures Analysis- 23Oct2020

(1) S&P500 Futures Technical Analysis: The above hourly chart uses both linear and non-linear analysis.The parabolic upmove broke down below 3500 on Oct 13th, and we have been seeing a gradual/controlled correction since then, which indicates that the market is consolidating and willing to go higher towards 3600 in November 2020.

S&P500 futures are near 3450 currently, and they are facing resistance at 3450, which is the downtrend resistance line. There will be a clear breakout above 3470.

  • S&P500 Resistance Levels: 3450 and 3530
  • S&P500 Support Levels: 3370 and 3400

(2) S&P500 Futures Trading Strategy: Stay long above 3400 for targets 3500-3530. Use corrections between 3400-3430 for buying to sell at 3450-3470 levels. Fresh long positions can be added above 3470 for targets 3500-3530. We must keep 3370 as the Absolute Stop for all long positions, even when we buy at 3400 level, because below 3370 we can see larger cuts and the next lower support is at 3220, which would be 150 points lower.

(3) S&P500 Options Data Analysis: For options analysis, we should always study SPY options, because SPY is the largest ETF of S&P500, and all major fund managers use SPY options. SPY is near 345 currently, and SPY 340 Puts are priced 5X more than SPY 370 calls, while both are exactly 250 points up/down from current market level 3450. This indicates very strong hedging/protection on the downside, and not much expectation on the upside, so the path of least resistance is on upside. Such scenarios almost always go in the direction that market is not looking, which is up in this case. So there is a high chance that we may see market upmove in Nov, after the US Elections. 3600 and 3700 are likely targets for Nov, but the market movements will be rapid. Stay long above 3400. Thanks.

S&P500 Futures Analysis- 01Oct2020

The S&P500 futures have been recovering in both price and momentum, which indicates a good quality recovery, and 3400 is a very likely target next week. 3350-3360 is a key support level, so traders can keep 3350 as the stop loss on long positions. Traders with higher risk tolerance can keep 3300 as the stop loss for target of 3450-3500, which are S&P500 Resistance levels.

The current recovery rally will become more durable once the 10 day SMA line starts trending up, rather than trending down, like its doing now. This will need the S&P500 futures to stay above 3300 for next 3-4 days. An uptrending 10 day moving average will stabilize and rebuild the market for 3500 target.

However, next 5 weeks will be volatile as we are just 4 weeks from US Presidential Elections. So, traders should keep relatively limited positions, and keep taking profits on all 20-30 point upmoves, because sharp intraday corrections are coming regularly, and they can be used for buying and then selling with 20-30 points gain.