S&P Levels to Keep in Mind

We're not sitting here day trading S&P futures, but I think it's important to recognize that there are levels both above and below current prices that are going to affect our portfolios. On Wednesday, the S&P500 broke its first significant level in a long long time. And it really wasn't even that big of a deal. I think what gives it that significance, if you want to call it that, is the fact that S&Ps broke anything at all to the downside. That doesn't happen these days...

Once we broke above 1600 earlier this month, the next upside targets were 1635 and 1660. These were just theoretical targets at the time, based on fibonacci extensions and measured move projections. But then the market spoke and reacted to those prices confirming their importance. So those former resistance levels are now support. After 1660 broke on Wednesday, the 1635 held as support on Thursday. If that breaks, then we should probably see 1600 pretty quickly.

After that things start to get hairy. That 1575 definitely comes into play based on former fibonacci retracements and some support & resistance that we saw at that price. But more importantly, you're flirting with uptrend lines at that point. And not just any uptrend line, but THE uptrend line from the November lows.

To the upside, S&Ps never reached that next 261.8% extension. That's not good news. But not the end of the world I suppose. I hate to say that this thing is probably all over below that 1540 level that was support throughout March and April, but it's kind of true. It means nothing at this point since we're 100 handles from there, but just something to keep in the back of our minds.

We currently have no position in the S&P500 and may not trade off these levels at all, or maybe we will. It all depends on the environment at the time. I do know there's a good chance I'll be a buyer at 1600 if/when we get there. But again, it all depends on how we get there and what else is going on around the globe. It also depends on how the rest of our book looks at the time. I wish I knew now what I'll know then. But I don't. So we can only plan and prepare and try to do the best we can to manage risk. Since risk management is the only thing we can control in this world, we'll try to focus mostly on that.

Good luck out there guys