S&P 500 (SPX) Technicals: 800 is Resistance ~ market folly

Thursday, March 19, 2009

S&P 500 (SPX) Technicals: 800 is Resistance

Wanted to post up a quick technical look at the overall markets. We've got two charts basically illustrating the same thing, courtesy of two solid technical analysis bloggers.

Firstly, Kevin looks at the S&P and notes that the past support is now future resistance around 804. Additionally, the 50 day moving average will also serve as resistance. So, he feels some selling will come into the market, and I'd definitely agree. The only thing that could disrupt this would be the newfound euphoria surrounding Ben Bernanke and the Federal Reserve's actions taken yesterday. Obviously, since those actions, we are now trading around the 795 level on the chart below, so make sure you take that into consideration, as this chart was from the day prior.

(click to enlarge)

Next, Stewie looks at the Diamonds (DIA) and notes the similar area of resistance. That similar level of support in October and November is now resistance in March. He also points out the recent volume, which could indicate things might start to sputter.

(click to enlarge)

So, you could play this level of resistance for a trade, as some sellers should come in. This trade is very easily managed as well, given the 'line in the sand' you can draw around 800-805 in the S&P500. As always: stay nimble and make sure you've got stops in place. Play the line in the sand in either direction, whichever way the market decides to flow. Adaptability is the name of the game.

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