S&P 500 Weekly Price Forecast – are we hitting a top?The S&P 500 rallied significantly during the week, but by the time we closed out the weekly candle, we have given back most of the gains. In fact, it looks as if we are trying to form some type of shooting star, a very negative sign. A couple of weeks ago, we had formed one as well and we are close to the tops.
The S&P 500 initially spent most of the week trying to rally to fresh, new highs but has failed. The close on Friday is going to be crucial, but so far it looks as if we are going to struggle and form a shooting star again. This shooting star is close to a major barrier that turned the market back around in January. I suspect there is a certain amount of fear when it comes to being at these high levels, and as you can see on the chart I have overlaid the Bollinger Band indicator, showing that we have touched the top of the range. I suspect we are going to see a bit of a pullback, but at this point I don’t have any reason to think that the 2800 won’t hold.
If we do break down below 2800, then I think we go looking towards the 2750 level, which ironically enough would coincide nicely with the SMA of the indicator. I recognize that there is a certain amount of interest at that level as it is a large, round, psychologically significant figure, in the scene of noise previously on shorter-term charts. All things being equal, I think that even if we do break out to the upside, a pullback is somewhat necessary in this environment. Ultimately, I think that we are a bit overstretched, and a bit of value building may be necessary.