Bulls Can’t Seem to Break 950 on the SP500

Jun 11, 2009: 2:21 AM CST

I mentioned earlier in my post “So This is What Resistance Looks Like” where I noted that 950 was becoming increasingly difficult for the bulls to clear – they still haven’t cleared that level.  Let’s step inside the 30 min chart on the S&P 500 to see the recent price action and current structure.

Though we flirted intraday on the open of June 5th, price hasn’t breached the 950 level – in fact, I’m surprised at how tight a level price has coiled in the 950 to 930 zone.

Until we break one way or the other out of this range, the price structure and trading tactics are clear – play long and short within the range once price hits an extreme in the range.

You might even want to avoid swing trading in this environment until we do get a price break, which would be expected to result in a trend (or momentum) move.

The 3/10 Oscillator is becoming useless in a flat momentum environment – so are the 20 and 50 EMAs on this timeframe.

Remember, during flat market conditions (triangles, ranges) oscillators (like the RSI or Stochastic, etc) become of value in highlighting possible overbought/oversold conditions to initiate trades.

Look closer and follow the price – do you really need an oscillator to show you overbought and oversold conditions in a clean consolidation as we’re having now?

So until we break above 950 or beneath 930, continue to watch the structure closely and lower your expectations.

Corey Rosenbloom, CMT
Afraid to Trade.com

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8 Comments

8 Responses to “Bulls Can’t Seem to Break 950 on the SP500”

  1. newbie Says:

    All be it a rising wedge, my feeling (expectation) is, that price break out to the upside because there is SO MUCH money being pumped into the system that it is still inflating, contrary to negative fundamentals. The shock of realization has yet to come, but not now.

  2. Bhupi Says:

    CHINA: JLR sales pick up as consumer confidence rises

  3. Bob Says:

    Tight range, back and forth action. A slightly upward slope to the lower trendline creating a rising wedge. Which way will it break?

    While the 950 level is a tough barrier of resistence, price is still holding tough above the moving averages; indicates the bullish trend is still intact.

    Some divergence exists between price and RSI pointing to price moving downward, but RSI levels remain in bullish territory; indicating limited downward expression in price and likely a continuation of consolidation.

    Volume is still declining; not so favorable for the bulls. Volume should lead a rally.

    A break above 950 would create a meaningful short sqeeze. Short covering would push volume through the roof and be the catalyst for a significant move upward.

    – Corey… What's your take on the EW count and proportional symetry?

  4. Reggie Perrin Says:

    1/4 ly option expiry coming up to add to the fun

    worth checking the open interest on the 950 strike

  5. Mike Says:

    Looks like we are now over 952 on the SPX with 45 minutes left in the session. We usually see huge activity on the Wednesday preceeding a Triple Witch. Where are all of the Elliott Wave guys? Did their Ending Diagonal make them too bearish and miss out on the upside?

    I believe so.

  6. Shuaib Arshad Says:

    Corey, now that SPX stayed above 950 level for about 3 hours and 10 minutes today, but closed around 945, how would you interpret such a move? Have the chances of move to higher levels increased or decreased? I am a bit confused as to what to conclude from today's market movement.

  7. newbie Says:

    Indeed, the wedge has become a rising channel of which the last (Friday's) bottom didn't even reach the lower bound. On both SPX and INDU.

  8. newbie Says:

    Indeed, the wedge has become a rising channel of which the last (Friday's) bottom didn't even reach the lower bound. On both SPX and INDU.