S&P cleared key resistance Tuesday, signified the one-week congestion pattern had resolved itself into a new upswing. Nevertheless, it will be important to monitor the retreat and rebound behaviors over the next few days to determine whether breakouts are decisive
Tuesday’s impressive rally had helped putting the bulls back onto the driver side of the market. However, given the looming resistance near S&P’s 2618-2630, there is no big commitment to accumulate stocks aggressively at this point. What this means is that as the S&P inches into the area of key overhead resistance, aggressive sellers will most likely dips in their toes to see how the market reacts. So, we’d be cautious against taking large position at this stage
Wednesday’s trading action was extremely strong in most respects. Though return of oversold conditions on an intraday basis will put a short-term floor under the market.
S&P broke key supports Tuesday, signify a bearish trend reversal. While the near-term technical backdrops favors further short-term weakness, it will be important to monitor the retreat and rebound behaviors to determine whether breakouts are decisive. In a longer term, there is a high probability of a period of consolidation activity between S&P’s 2600 and 2800 that might last several weeks if not months. This consolidation band provides a rally and retreat trading environment for traders. However, market is volatile and tight stops are advisable