S&P 500 Levels

We wish there was more insight gained from our variety of S&P 500 market breadth indicators at present, however right now most of them remain in neutral status not yielding much information. That said the most useful look at the S&P 500 right now comes in the form of analyzing the various levels of support and resistance. As seen in the 31-day chart above since breaking near-term support levels at the 850 – 845 levels (double red lines) the index has moved lower.

Presently the S&P 500 is forming an every tightening triangular consolidation pattern between two converging trend lines (blue lines). A shorter-term trading direction will only be re-established once one of these levels (840 on the upside and 825 on the downside) is violated. A break above 840 then 850 would suggest that the recent test of the lows was a successful test and maybe a tradable low is forming, however a break below 825 would suggest the market is likely to leg down again and break the November lows.

Until one of these events above occurs the best thing to do is observe and wait for a good entry point



FROM FUSIONIQ S&P 500 REVIEW 1/26/09





posted by Peter Greene