Today is 09/09/09. Happens once ever 100 years - savor it. Nine is one of my lucky numbers - and it's happening 3 times (which is my other lucky number) - so you'd think that today will be an awesome day. Hopefully it will be :-)
In the few days bracketing Labor Day weekend, the S&P made it through the Valley of Death and made it past the 1014 resistance line pretty easily. Now it is in that trading zone between 1014 and the 1039 high in which it occupied most of August.
S&P 500 - 15 Min Chart - 4 Days
So it's very obvious from here that those are our 2 numbers to watch - 1014 for support going down - if it breaks down through this, especially a second time, it will be good for the bears - and 1039 as resistance on the upside - if it breaks through there, needless to say it will post a new 2009 high and will be good for the bulls.
The S&P closed yesterday at 1028 and spent the overnight below that number - so the open will probably be to the downside. I expect that the post-Labor Day trading will begin in earnest today, so whether the bulls can step back in and push prices back up could be a good early indicator of how things will play out from here.
Here's a daily chart:
S&P 500 - Daily Chart - 3 Months
First off - notice how yesterday's volume picked up and was over the vol 45 ma - we should expect to see that regularly for awhile as trading picks after the summer doldrums.
The red line at the top is the August and 2009 high that the S&P needs to break through to move out of this trading zone.
I put some circles on the current trading zone area when we were here back in August so we can do some comparisons. As you know, I like to use the MACD and MACD-H as momentum indicators and, as can be seen, the current levels of both the MACD and MACD-H are lower than when we were here a few weeks ago. That isn't good for the bulls and doesn't favor a continuation of the uptrend.
Look at the area in early August where the S&P bounced along the Fib 38.2 at 1014 for a week before turning down, found support at 980 and came right back. What's happened the past couple of weeks where the S&P then bounced around off of 1039 and then retreated, found support at the 992 level and came right back. The market does this sort of repetition a lot, so that in itself isn't too unusual - but look at where the MACD and MACD-H are during both waves. The second wave, prices were higher, both at the top and where support was found after the pullback - but the MACD and MACD-H are both lower in the second wave than the first - and, more importantly for my purposes, the depth of the MACD-H (bear strength) was much deeper the second time, even though prices were higher. That is a clear divergence, and can be interperted as saying that the uptrend will fail. However, I've been saying this since April, so who knows?
So, bottom line, S&P needs to push through 1039 to go forward (and it faces immediate possible resistance at 1044 (theoretically, 1039 is close enough to 1044 that 1039 could be considered part of the 1044 resistance area) - or it needs to drop below 1014 for the bears to take control. And, as I say repeatedly, not just an intraday poke, but a close. None of this isn't anything that we haven't heard before. As the saying goes, it's deja vu all over again.
Good luck.