We see it all the time: Support turns into resistance and resistance turns into support. This phenomenon occurs over and over again in liquid asset classes around the globe. Today it appears most obvious to me in the S&P500.
We’ll use the ETF $SPY to keep it simple. The important polarity levels are roughly 138.50 – 139.50. Here is a two month 30-min chart of the S&P500:
The first time this level served as support, it broke after the 3rd attempt with a gap lower April 9th. For the next few weeks, this former support served as new resistance. It took 4 attempts this time to finally break through. These highs were taken out on April 26th.
We’ll chalk up the current price action as the first test of new support. If the last two months have taught us anything is that it should take more than one try to break down. If this does eventually occur, the consequences would be another 4 points or so down to the April 10th & 23rd lows.
Big jobs number Friday morning. But aren’t they all big?
Tags: $SPY $SPX $ES_F