S&P 500 Chart – Strong Week Ended at Resistance

This week showed us that during a rally what goes down must come up with very little delay.  If you didn’t add to your account when the markets had their dip you missed your chance a few hours later and each day this week reminded you of it with the S&P 500 ($SPX) finishing up 4.5% after five positive days in a row.  But there might be hope for you again.  I’m only charting the past month to make my point this week.

I charted the S&P 500 after the markets closed on Friday when it hit 1,071.51 intraday and closed for the day at 1,071.49.  That’s 0.17 lower than the high close of 2009 on September 22 when it ended the day at 1,071.66.  A difference worth noting on 9/22 is that the intraday high got up to 1,073.81 before faltering slightly and then the next day the SPX reached 1,080.15 intraday before starting a longer and deeper slide.  I’m getting nit picky on these numbers because on Friday it seemed the whole day was about NOT getting above the closing high of the year.

Even though the SPX finished within two cents of the highs of the day, the fact that it could not break resistance might play bigger.  I’m expecting this line to gain importance each day the SPX doesn’t get over it.  Along with the lowest horizontal line I drew marking the closing high of the year, I added two others within reach that could both at as resistance too.  The biggest for me is the top one which marks the intraday high from September 23rd.  Getting over that line and closing above it will be big. 

The one diagonal line I drew marks the past week’s short trend line of higher lows.  Once that line broke it now appears to be the making of a trend line of higher highs.  Next week will be interesting to see if this sharp incline can continue or if the horizontal lines of resistance will prevail.  I’m expecting the latter.

 I left the moving averages in for the 10, 20 and 50 day moving averages.  Monday, October 5th, was an interesting day for technical analysis.  I’m a big fan of watching Williams %R.  It signaled the start of another bull market rally, but at the same time the 10 and 20 day moving averages offered up a bearish cross over.  The former one out in this mini-battle, but it may not be over yet.  The 50 day moving average is down near 1030.  If the SPX could come back to touch it again for support I’d probably get even more deeply invested than I have over the past couple of weeks.

Don’t forget, next week is October options expiration too.  That can always add a touch more volatility as hedges start to expire and traders have to pick new positions to take.  Earnings season continues to build steam at the same time, so stay nimble these next couple of weeks.  Interesting times are ahead.