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Fan Yang

Expect S&P500 to stick around 2000 with limited upside

Brexit Induced Plunge: Global equities are taking a hit after UK voters voted for a Brexit. The risk aversion quickly reached across the pond, the S&P500 fell sharply from above 2110 to below 2000 in 2 sessions. 

SPX Daily Chart 6/28

(click to enlarge)

Approaching central pivot: As we enter the 3rd session after Brexit, we should still expect bearish pressure, with downside risk towards the 1970-1980 area. This area represents the central pivot of the range we have seen since late 2014. If the RSI dips below 30 then turns back up, we should anticipate a bullish attempt.

Limit bullish outlook: While we should anticipate some buying if price falls towards 1975, we should limit the upside. The idea for the bullish correction is that 2000 could be a "sticky" price level, which means price might gravitate towards it. Price will likely shoot above and below it. While 1975 is a support below 2000, the 2030-2040 area (previous support) could be a key resistance above 2000. 

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