S&P 500 forecast for the week of December 25, 2017, Technical Analysis

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The S&P 500 tried to rally during the week, but as we closed, we ended up forming a shooting star, and negative sign indeed. The 2700 level looks to be rather resistive, so I think that the market may be looking for a pullback. · FX Empire

Christopher Lewis

Updated Fri, Dec 22, 2017, 11:06 PM

The S&P 500 has rallied significantly during the week, but rolled over at the 2700 region to form a shooting star. The shooting star of course is a very negative candle, and I think at this point were going to see sellers step into the market in what will be very thin trading conditions. I don’t expect some type of massive selloff, I just think that a pullback is probably necessary. The 2650 level will be the first target to test, but once we break down below there, I think that the market will probably reach towards the 2600 level further below. That’s an area that I think will be supportive, based upon the previous structural resistance.

I would love to buy the S&P 500 closer to the 2600 level, and a supportive candle is reason enough to get involved. A bounce from there would be a nice buying opportunity as well, as the longer-term uptrend should continue. I don’t think that we are going to break down drastically, I just think that we’ve got a little ahead of ourselves, which happens from time to time. With tax reform coming out of the United States, that should continue to be bullish for the S&P 500, but we did run up in anticipation of that situation, so I think that a “buy the rumor, sell the news” move may be ready to happen, which would of course help us find value and lower pricing.