It’s show me time for the S&P500. If you remember, 1420 was the key support level that we were watching six weeks ago. We said that as long as the buyers held on to that price, the path of least resistance was higher. Unfortunately for US Stock market bulls, that support broke and the correction was on. We saw another 5.5% to the downside after that.
But here we are closing out the month of November and the S&P500 is approaching that level once again. As technicians we have to recognize that the former support at 1420 should serve as some resistance. How much so, and how long it could take to recover 1420 is still to be seen.
Here is the chart showing the level we’re watching:
This is why I think it’s show me time for the S&P500. You held on to the 61.8% Fibonacci Retracement from the rally off the June lows – great. You got back above the 200-day moving average and retested it successfully – great. Now prove to us that you can recover those key 1420 levels and continue to march forward in this bull market. That sort of strength would tell us a lot about equities as an asset class.
Tags: $SPY $SPX $ES_F