Here We Go – Make or Break at SP500 1150

May 6, 2010: 11:47 AM CST

Sellers 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

May 4 Color Bar SP500 Update

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

7 Comments

7 Responses to “Here We Go – Make or Break at SP500 1150”

  1. A Quick Assessment of the May 6 Fallout on the 5 Cross Market ETFs | Afraid to Trade.com Blog Says:

    […] 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 […]

  2. bkudla Says:

    Hey Corey, what price level convinces you we failed to hold support? Thanks

  3. Corey Rosenbloom, CMT Says:

    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.

  4. bkudla Says:

    Thanks, you offer good advice. Slope of Hope allows guest posts, you should
    submit them.

  5. Comparing May 6 to 1987 Crash Intraday | Afraid to Trade.com Blog Says:

    […] buyers lost the 1,150 support, it created a violent positive feedback loop with bulls taking stop-losses (exiting/selling) and […]

  6. bernard12 Says:

    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/

  7. So... Why Exactly is Technical Analysis Important? | Afraid to Trade.com Blog Says:

    […] 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 […]