We are deep in the earning season, which is one reason American companies lost steam. I mean, most of the companies crush estimates (which helped the recent rally), but one did not. This company was Facebook, which heavily disappointed traders on Wall Street. It had a more significant impact on tech-heavy Nasdaq, where Facebook weights more, but we could also see an impact on today’s hero – SP500.
Yesterday’s session left on the SP500 chart a Doji (yellow), which is a candle of hesitation and a possible start of a correction. What is important is also the place where this Doji is present. I guess it is not a coincidence that it had been drawn on the crucial mid-term horizontal resistance around 4590 (blue), which served as a support at the end of December and beginning of January. Yes, from the technical point of view, this is a good place for a correction.
So, the base scenario, for now, is a small movement to the downside, but sentiment remains positive in the long term. In our view, we see the possible breakout of the blue resistance and a further attack on the new all-time highs.