Spread betting the S&P 500

Today we take another look at spread betting the S&P 500 and some spread betting strategies that can be used in this market.

As we have been writing for quite some time now, the S&P 500 remains in a long term downtrend so we are still only using spread betting strategies from the short side.

The important things to look at in this market at present are the direction of the long term trend, which is down, and the failure for the market to clear strong resistance at 1129. We have been writing about the importance of that particular resistance level for a long time and the market’s behaviour over the past couple of weeks has confirmed the importance of that level.

Resistance at 1129 has been tested on numerous occasions and each time buying has dried up and sellers have taken over and this culminated with the steep sell off last week. Since then the market has found some support but has not been able to recover.

On the longer term charts using the weekly timeframe we got a bearish engulfing pattern, which suggests that the market may move lower again in the direction of the trend. The highs of that pattern should also provide some resistance at 1127.5, just below the major resistance at 1129.

This week has so far seen the market move higher from a support area around 1065 but fail to clear the 1100 level. As we have mentioned before, 1100 was previously providing good support for the market but once that support failed we get a change of polarity so that old support becomes new resistance.

Therefore, in the short term we have resistance at the 1100 level and the market has tested that level unsuccessfully in each of the last 2 days. The market is also below the 200 day moving average and this may also provide some resistance. Currently the 200 day moving average is sitting at 1107.

In summary then, the long and short term trends are down for the S&P 500 and there is resistance from 1100 to 1129. There is also some support around 1065. These are the levels to watch over the next few days, but whatever happens I won’t be buying this market at any time during the next few weeks. Longer term I still believe that this market is heading substantially lower but we’ll have to wait and see.

Until next time, good trading

Phil Seaton

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