Quick Upside Resistance Levels to Watch on SP500

Jun 14, 2010: 10:19 AM CST

As we move up off the key “Edge of a Cliff” level – 1,040 – in the S&P 500, let’s take a quick look at the reference levels to watch as potential resistance on the S&P 500 on the bounce.

The most obvious overhead level for a short-term ‘make-or-break’ level is again 1,110.

You don’t have to get fancy to know that – we hit that level two times recently after the May low and buyers failed to push the index beyond that level – thus, it is the key for now.

If you do want to get fancy, though, 1,110 is the 38.2% Fibonacci Retracement (1,108 actually) and 1,108 is currently the very important 200 day SMA – which we’ve also tested twice and failed to overcome.

Should buyers jam the index beyond 1,110, then it would likely create a quick “Short Squeeze” or popped stops breakout situation that could quickly send the index to any of the following upside targets:

1,120 (50 day EMA)
1,130 (50% Fibonacci Retracement)
1,150 (61.8% Fibonacci Retracement and key price level)

To make it abundantly simple, the pathway forward (in terms of reference levels) seems to be:

IF above 1,110 THEN expect 1,150
IF under 1,110 THEN expect 1,040

Basically, what that says is that we remain in a short-term trading range between 1,040 and 1,110.  The range will continue to hold until we get a breakout – and we will – in either direction, which should lead to a continuation move.

Reference the following prior updates:

“Bulls Willing to do Anything to Avoid Falling into the Abyss”

“Third Time’s a Charm?  SP500 Tests Line in the Sand”

S&P 500 Poised on the “Edge of a Cliff”

Edge of Cliff Level to Watch in the Russell 2000

And for the reason why we watch key levels:

“So… Why Exactly is Technical Analysis Important?”

Be safe.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

4 Comments

4 Responses to “Quick Upside Resistance Levels to Watch on SP500”

  1. View of SPX Market Internals June 14 at Highs | Afraid to Trade.com Blog Says:

    […] View of SPX Market Internals June 14 at Highs Jun 14, 2010: 12:31 PM CST The S&P 500 continues – so far – to trade within the boundaries of a trading range, as I mentioned in this morning’s post. […]

  2. TraderMark Says:

    Agreed

  3. Frank Ochoa Says:

    You are spot on about 1,110, Corey!

    One thing I find interesting is the fact that price is forming a bearish candlestick right at this zone, which also coincides with the bottom of the monthly pivot range for June at about 1,101. In a down trending market, pull-back to the pivot range are seen as selling opportunities.

    Therefore, if price cannot close above 1,110, we could easily see another test at 1,040…

    Cheers!

    Frank

  4. Saurin Shah Says:

    Excellent way of predicting future ..