Holiday SPX Short Term Key Levels to Watch

With Monday’s decline taking some investors and traders by surprise, let’s pull the perspective back and take a look at the current Daily Chart and then Hourly Chart structure, levels to watch, and “IF/THEN” Logic setting up right now.

First, the Daily S&P 500:

Stripping the chart to its most basic simplicity, there are two key price levels to watch.

Immediately overhead, we have the 1,200 which held this morning as resistance – and this big failure (so far) here could be telling.  As such, keep a close eye on 1,200.

ANY resurgence in price above 1,200 triggers a “Popped Stops” play to 1,230 – simple expectation (especially now, since bears are rushing in and placing fresh stops above 1,200).

So that’s resistance, but what’s support?

Initially, we have the rising 50d EMA at 1,171 and then the lower Bollinger Band at 1,167.  Perhaps more importantly, price formed a short-term swing low last week at 1,174.

Take a look at my prior “Playing EMA Breaks” lesson post for how trends and EMAs work in terms of setting quick plays and targets.

That forms a triple confluence about the 1,170 area to watch.  And of course, IF price falls under 1,170, THEN expect lower prices – perhaps to 1,150 or lower.

Ok – so that may be as far as some you need to go in terms of setting up your expectations and potential trades for this holiday week.

Those that want a bit more information from the Hourly Chart, read on:

We see the initial resistance at the 1,195 level going into November and the massive 20 point “Popped Stops” play that was expected on a breakout above 1,200 – 1,228 was the likely upside target, being the 61.8% “Large Scale” Fibonacci area – which successfully held back the buyers.

Now that an initial downswing formed to test the 1,170 area, what’s the short-term levels to watch?

I drew a simple Fibonacci Retracement grid from the recent 1,228 high to the 1,174 low to arrive at the following levels to watch.  In fact, only one level comes into play in a major way.

It’s the 50% Retracement at exactly 1,200.  Not coincidence, but confluence – and so far the buyers have been unable to break the confluence.

Friday’s push up to the (now) “Double Top” (see lower timeframe charts) occurred on a clear negative momentum divergence that – at least from the chart odds – forecast better odds of a downward move than a breakthrough.

Today’s action is that downward fall from the 1,200 level.

The key short-term support level to watch again is the 1,174 level from the prior swing low – a price takedown here sets up even lower targets ahead.

And of course the alternate “IF/THEN” is in play, which is the “IF buyers can bust through all the resistance at 1,200, THEN the next play becomes a ‘Popped Stops’ move to 1,230.”

From the chart perspective, unless we get a solid break above 1,200 or under 1,170, we’re likely to see a ping-pong range move going into Thursday’s Thanksgiving Holiday.

Be safe and watch these levels objectively.

Corey Rosenbloom, CMT
Afraid to Trade.com

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