It took 3 tries for the SP500 to get through strong resistance at the July 2008 low of 1200, however, it went through weak resistance at the March 2008 low at 1257 like a knife through hot butter confirming the view that previous tested and penetrated levels of support and resistance are relatively weak while untested and unpenetrated levels of support and resistance are relatively strong.
The 1327 level from the May 2006 high provided strong support in 2008 as it took 3 tries to break down through that support level. It has now proven to be resistance as the SP500 is on its way to closing below it 2 weeks in a row. However, while it is resistance it should prove to be relatively weak resistance after lower levels of support at 1257, 1227 and 1220 are tested first. 1257 may hold, but 1227 looks to be the better candidate to hold the pullback. The next move up should take the SP500 to 1406 to 1440.
Traders should take note that had the SP500 failed at the 1257 in January as had been expected due to the bearish wave counts and cycles, the bears might have prevailed, but once 1257 was cleared easily we had to throw out the bearish view and accept that wave [C] up was underway. It was easy enough to catch the 2009 rally into 2010, but difficult to navigate, at least for me, the 2010 trading range. At this point there is just not much evidence to support the bearish case.
Having broken back above the level from which the market crashed in 2008, it is unlikely that the market will fail there again near term. Previously broken support that is regained is not given up easily. We may trade around in the zone from 1227 to 1327 for a while, but once the recent high is taken out there is very little resistance left and the old highs will be in sight.