Saturday, March 14, 2009
Resistance In The SP500
There may be debate as to whether this is the beginning of a significant bear market rally or just a minor wave 4 before another low in the indexes, but one thing is clear: the SP500 has major resistance to hurdle between 780 and 804. It is unlikely that it will do so on the first try, so some sort of correction, whether a pullback or retest of the lows is likely after that zone is reached next week. Only if it is penetrated forcefully on the first try with a solid close above the resistance zone on higher volume could such a correction be avoided. If that were to happen, the bears would be forced to cover and a dramatic and explosive rally should follow. A close below the low of the high bar of the rally below resistance would be a signal that the correction is underway, although it would not be, in my opinion, a signal to be short except for the most "nimble" traders.
Posted by R. Craig Pritchard at 4:55 PM