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Today’s Trading Edge: Profit taking hit e-mini futures on the S&P 500 index as the year comes to a close

Posted by WorldWideMarkets . on Dec 28, 2016 8:03:04 PM

WWM SP 500 DEC 28 2016.jpg 

U.S. equity markets reversed course as profit taking takes form as year-end approaches.  US stocks pared gains as lack of an economic  catalyst and a strong dollar started to weigh on market valuations. 

The US currency traded at its strongest level in more than a decade and oil remained near a 17-month high.

The S&P 500 index futures daily chart shows the recent rebound has tentatively respected a bearish ABCD pattern.  Point D is targeted with the 141.4% Fibonacci expansion level of the B to C leg.  If we see a pullback towards the 38.2% Fibonacci level of the potential C to D move, we could see buyers come in and buy the dip.  If the bearish drop persists, we could see a pullback target the $2,170 level.  If the pattern is invalidated, further upside may target the $2,300 to $2,325 area. 

The trade: Buy E-mini SP500 at $2,220, with a stop loss at $2,210 and a take profit at $2,250.  The risk/reward ratio is 1:3

Topics: Equities Market, Stocks, US equities

 

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