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Article / 06 July 2016 at 14:00 GMT

About turn! A reversal day for US indices

Technical Analyst / FuturesTechs
United Kingdom
  • Yesterday was bearish for both S&P 500 and Dow Futures
  • Break of S&P levels between 2056.50 and 2062 would substantiate trend
  • A break of 17,603 and 17,556 in Dow Futures would start the confirmation
 Have the bears returned to romp around Wall Street? Photo: iStock

By Clive Lambert

The S&P 500 and Dow Futures both posted reversal days yesterday:

Bearish Outside Day = Western Chart pattern (reversal!) - A bar/day (at high levels/in an uptrend) with a higher high, lower low and lower close compared to the previous day = Bearish!

Bearish Engulfing Pattern = Candlestick (reversal) pattern = A candle with a large red real body that totally surrounds/engulfs the real body of the green candle before it = Bearish!

West or East, yesterday was a reversal candle, ticking all of the criteria above (it’s not always like this; there are subtle differences, but the “thinking” behind both are similar). A break of 17,603 and 17,556 in the Dow Futures (Sep '16) and we’ll start to CONFIRM. Important word, that, hence the capital letters!  17689 was yesterday’s low so could be gap resistance from the off. Could be…

In the S&P 500 Futures (Sep '16) the levels we would like to see breaking to add weight to the reversal idea are all bunched together between 2056.50 and 2062. Yesterday's low was 2072.50, so this will be an early reference as day session trade kicks into life. Above here 2081 is another level of focus, gleaned from our Market Profile charts.

Chart 1: Dow Futures Daily chart showing the reversal day posted yesterday.
Dow Daily
Chart 2: S&P Futures daily chart: Ditto!
S&P 500 Daily

– Edited by Clare MacCarthy


Clive Lambert is chief technical analyst at FuturesTechs

07 July
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
Well that was a waste of time! NO confirmation whatsoever as the dip buyers (once again!) did their thing...


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