Published 02nd November 2018
The S&P 500 had a sharp reversal this week. We anticipated that kind of action and discussed it here during the past couple of updates. Is this bounce a trend reversal or is there another whipsaw to the downside? This is probably the reversal. The major US indices most likely show a broad-based impulsive move from this week’s lows. Its character does not fit any longer into an overlapping structure.
The reaction has taken the index close to the 38.2 Fibonacci level. Moreover, the move has been strong during a relatively short time span. The short time span in combination with the impulsive character makes some form of follow-through to the upside likely. The 2,800-2,820 area is now an important resistance and potential target. Last but not least, the solid black line (2009 trend) is likely to act as short-term support.
All in all, the countertrend rally is likely to last for another few weeks.