Here We Go – Make or Break at SP500 1150
May 6, 2010: 11:47 AM CSTSellers took the S&P 500 down to the key 1,150 important support level, which was the target if the 50day EMA was broken.
Now that we’re here, let’s pay very close attention to whether buyers step up to support the market here, locking in this key support level… or whether they fail.
Refer back to prior updates that discussed the play and levels to watch:
Levels to Watch on Major US Indexes
Now that we’re here at 1,150, the market is at a critical juncture in time and price.
If we support here, then this move was nothing but a nice retracement in the prevailing uptrend.
Failure to hold 1,150 opens the door to aggressive sellers that could turn this into a full-blown reversal… or at a minimum send us back to test the 1,100 ’round number level’ then the February lows at 1,050 if buyers can’t hold support there.
For intraday traders, a major test of a key daily level always offers an opportunity – to play the bounce if we see a divergence in internals… or to play the breakdown on a surge through the level with deteriorating internals and surging volume.
Right now, it looks – as of 12:30 EST – to be the ‘play the bounce with positive divergences’ play but that could change quickly:
We did have a nice solid bounce just before 11:00am CST as price pushed its way to test 1,150 officially while a distinct positive TICK and 3/10 Momentum Divergence formed.
Bulls responded with a bullish engulfing ‘power’ candle that triggered an aggressive buy signal for those so inclined to take it.
Both bulls and bears are watching 1,150 very closely, so we could certainly see some activity/volatility at this level so do be careful whatever play you choose to make here.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
May 6th, 2010 at 3:11 pm
[…] mentioned in this morning’s post “Make it or Break it! Here we Go at 1,150” that if we’re under 1,150, then we’ll most likely see 1,100, and if sellers push […]
May 6th, 2010 at 5:05 pm
Hey Corey, what price level convinces you we failed to hold support? Thanks
May 6th, 2010 at 5:13 pm
I'm suspecting we'll get one or two tests of the 1,150 level as it is very important.
I'd say anything under 1,145 takes us beyond the realm of “rinse and wash” or “stop-loss runs” or “bear trap,” but always watch to see what internals and volume are doing at those points in time.
May 6th, 2010 at 5:35 pm
Thanks, you offer good advice. Slope of Hope allows guest posts, you should
submit them.
May 7th, 2010 at 11:16 am
[…] buyers lost the 1,150 support, it created a violent positive feedback loop with bulls taking stop-losses (exiting/selling) and […]
May 10th, 2010 at 3:58 am
support is officially broken and even MORE importantly, earnings season is slowing down and there is less bullish sentiment to run the markets now that the reports are passing for the most part. these reports drove the market continually higher, yet TA breakdown and euro debt problems will trump the better earnings for now. I like small caps to outperform the markt over the rest of 2010 and i've been picking winners from http://www.microcapreports.com/
May 25th, 2010 at 4:42 pm
[…] initially when we broke under the first KEY support level at 1,150 – (which I posted “Here We Go – Make or Break at 1,150“) that was the day the flash crash occurred (no, it was no a singular fat […]