S&P-500 (Fut): Down Nearly 8% From Cycle High, Below 1965, Target May Be 1950-1930-1900 And It Need To Close Above 2015-2035 For Any Sustainable Recovery

Technical Charts:

Technical Analysis:

Looking at the chart, S&P (CMP:1969), has immediate support of 1965 and sustain below that came 1950-1936-1930. Only consecutive closing below 1930, it could further fall to 1920-1900 & 1872-1850-1835 area in the near term (worst bear case probability). Possibility below 1900 is unlikely as of now.

On the bright side, sustaining above 1965-1972 zone, immediate target might be around 1978-1985 & 1995-2008-2015. Only consecutive closing above 2015, S&P could target 2035-2050-2070 in the short term and sustaining above that it may further scale up to 2085-2101-2117-2126-2134 in the near term (bullish scenario).

Technical Trading Levels (Positional):

	SL</>5	FROM SLR
		S&P-500	CMP	1969
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	1972		1978-85	1995	2008-15*	2035-50	2070-85*	2101-17	2126-34	<1965
Weak <	1965		1950*	1936-30*	1920	1900	1872	1850	1835	>1972

Rationale:

As we all know, China jitters (Yuan devaluation & slow down fear), tepid US growth amid strong USD & lack of confidence in Fed for liftoff and Greece uncertainty (political situation) is taking a toll over global market including S&P-500. Adding to the wound is crash in Crude (below 40$, may target 32$) and that is affecting energy companies & producers nations very badly.

The market want sustainable US growth at any cost to lead the global economy, but various confusing data and lack of inflation amid depressed commodity prices and China slowdown are some of the factors, that may be affecting confidence of Fed to raise rates.

Looking ahead, Fed may continue its "verbal intervention" tactics by various dovish & hawkish FOMC members in a cyclical way to control the already strong USD in a preferred range, rather than any actual action. Going by the Fed Fund Rate, there is now around 35% probability of Sep rate hike and all are looking for any real action in Dec'15. Again, that said, in Dec'15, Fed might preferred to be in the side line and ultimately the near 0.25% Fed rate will be the "New Normal" in the changed world.

Another thing is that all the major four pillars (Fed/ECB/BOJ/PBOC) of the global economy are closely co-ordinating with each other amid this drama of "Currency War" and actually controlling the overall market since "Lehman Crisis" period in 2006-08. So, do not expect the S&P to correct more than 10% from the last cycle high of around 2134 and that came around 1920. Thus 1900 in S&P should be the final base line for now. 

In the last few years, whenever, S&P corrects around 5%, Fed intervened through various dovish FOMC members (like Dudley) and they basically did not allow the market to fall more than 5%. May be, S&P at 2134 is creating some type of stock market bubble in the mind of Fed and that's why they are looking for 10% correction this time, which is very healthy for a "secular bull market". 

Fed will preferred to be in dovish mode in the near term as a 1%  strong currency (USD), which is equivalent to 0.25% rate hike, has already happened in the US economy.