MARKET MATTERS, SPX UPDATE AS OF 01/28/2010 CLOSE
MARKET MATTERS, SPX UPDATE AS OF 01/28/2010 CLOSE
by SCOTT McCORMICK, CMT
On Monday I wrote that the long term picture of the SPX seems to have changed due to the breaking of the major trend lines that had been in place since March and July last year. As of today’s close the SPX continues to drift lower, however at a slightly slower pace than it declined Thursday and Friday of last week. The SPX managed to test the lows of November and early December ultimately triggering stops, and pushing the SPX to 1078 before bouncing back above the 1080 level only to close at the November/December support levels at 1084.
Due to the confluence of support levels (1075 a .618% retracement of November low to January high, the low from the gap day on November 9th at 1080, and of course the four swing lows between 1084 and 1086) between 1075 and 1086 the negative momentum may subside, allowing the market to move sideways, and potentially higher in the coming weeks. As SPX is still trading below the trend lines coming down from the high in January 19th, a movement above the trend lines, and the last intraday swing high at 1099.51 would be required before considering a long position in the SPX, or a SPX equivalent.
Should the hourly trend continue to the downside, the next targets beyond 1075 would be 1055, 1043, and 1029 which represent the 78.6%, 88.6% and 100% retracement of the November through January rally.
