Back to the Box From a Month Ago

About a month ago we discussed this "Box" that the S&P500 had been stuck in (June 27, 2011). The range at the time was about 1260 - 1290 and we said that in which ever way the market decided to break out would probably lead to an explosive move in that direction. Sure enough we saw violent 6% move to the upside over the next week or so. That worked out well for the bulls and squeezed some shorts along the way. We'll chalk this one up as just another example of the type of move that comes from long consolidations.

Since that directional move in the S&P, we have managed to come back towards this "box" that the market broke out from about a month ago. The laws of Polarity tell us that prior resistance should become support. The upper end of that range from a month ago was major resistance and that is exactly where we find ourselves today. Also note that the upward-sloping 200 day moving average is coming into play here as well. Granted that it is a moving target, but keep in mind it is currently sitting at 127.67 for $SPY and rising rather quickly. Will this Box turn into a "basket" of sorts and catch this falling S&P?

Here is the chart:

Lets reevaluate this set up for the markets early next week when some of this dust settles.