S&P 500: Key Levels To Watch (Technical Analysis) ~ market folly

Thursday, December 10, 2009

S&P 500: Key Levels To Watch (Technical Analysis)

Adam over at MarketClub is back with a fresh look at the S&P 500 to decide whether or not the market is about to collapse or take off higher. You can check out his technical analysis video on the S&P 500 here. He pulls up a chart of the S&P and uses the fibonacci retracement tool to connect levels from 2008 to the lows in March of this year. Upon doing so, he notices that the 50% retracement level, often an important retracement, lands right where the market is currently and is serving as resistance for the S&P 500. Click the chart below to watch the video:

He also points out that there's been a divergence in the MACD for a long time as it has headed progressively lower while the market has headed higher. This divergence has been building over time and can be telling. He then zooms in to recent action and notes that the market has been rangebound lately and has been trading sideways. The 1,110 level has been serving as resistance for the market while 1,083 has been serving as support in the range. So, if it falls below that level, it could mean the market is going lower. And conversely, if the market breaks out above 1,110 then look for prices to head much higher. He says these are important because the market has become very technically-driven. Check out the video for Adam's full technical analysis of the S&P 500.

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