Tuesday is following a similar pattern so far, with US indices rising during the day, but the cash session could bring further selling. At the time of writing, the SP500 index was 0.3% higher, trading at around 4,370 USD, erasing earlier losses.
It looks like there could be a solid support base in the 4,340 USD zone, and as long as the index trades above it, the short-term outlook seems bullish. Another demand zone is at the current swing lows at 4,280 USD. Should the price drop below it, the medium-term downtrend would most likely be confirmed, targeting the 4,000 USD level in the neg lower.
Alternatively, the target for bulls is near 4,400 USD, followed by the bearish trend line at 4,425 USD. There is a significant bullish divergence between the price and the RSI (21) oscillator, possibly helping the bullish case for now.
The big picture remains bullish for stocks as central banks continue to pump record amounts of money into the financial systems, which is not going to change anytime soon. Therefore, the dip-buying strategy is still preferred among traders and investors.
SP500 4-hour chart, 3:15 PM CET