On The Fly: Weekly technical notes for S&P 500.

The S&P 500 (SPX) is set to end the week slightly lower after the index hit a record high last week. Traders are waiting for the outcome of the G-20 before they are ready to commit to heavy buying or selling. At time of writing the overall consensus from the sell side was that there would be nothing much of consequence coming out of Osaka. While that explains the low volatility and putting on of some hedges, that view could be far too complacent. If the news were more positive than expected, there is every chance that the index would break out and surge above the 3000 level for the first time. The dollar would likely strengthen, gold fall, and bond yields rise. Equally, if the tone or outcome is for more trade agita then the index could as easily tumble through the 2900 area and perhaps down to the 2850 area. Until we get news, there is not a lot that we can do in terms of sorting out levels technically. All we can do is prepare for the potential of a larger volatility event than is currently viewed as likely. Heading into a holiday-shortened week is likely to further exacerbate any surprise reactions we may see.