Yesterday amid all the 090909 hoopla I forgot to note that it was also the 6 month anniversary of the March uptrend - the lowest close of the big decline - 676 - was touched on March 9 (my birthday, btw) - and it's been up up & away ever since.
Yesterday, the market came back at the very end of the day , boosting the S&P to 1033.37 at the close - a new closing high for 2009 - but still stuck in the current zone below 1039. For all the attempts that the S&P has tried to get past this range, this was only the second time that it's managed to close above the 1030 mark. Overnight, things rose, things fell, and now things are pretty much unchanged. So this morning should be what they call a "mixed opening" with no real apparent direction.
I pointed out yesterday afternoon that every time so far that every trip into the 1030s has resulted in a pullback back into the 1020s (or lower) - so a low bar of staying above and closing above 1030 could be considered a small victory for the bulls. But there is still strong immediate overhead resistance, say in the 1035-1045 range. The real bull victory will be to get past and close above that.
One of the ways that the March uptrend has shown great resiliency (understatement much?) in that there have been several occasions in the past 6 months in which prices have stalled at big resistance areas, knocked against resistance several times, and then rather than getting discouraged and giving up, instead gathered up the strength to push on through. So even though we've been in the 1030s a bunch of times so far without further success, I wouldn't necessarily count out a move higher from here. The Fibonacci people look at the major Fibonacci Retracement areas for important reversals - so if the 1014 Fib 38.2 Retracement area is finally cleared, then things won't likely reverse until the 50.0% Retracement (about 1115) or even up to the 61.8% area at around 1230. 1230 - wow - that's heady.
Haven't we cleared that Fib 1014 area? Afterall, we're at 1030 now, right? Let's take a look at the weekly chart:
S&P 500 - Weekly Chart - 16 Months
On the weekly chart, prices are still very much interacting with the Fib 38.2 area at 1014. It's been 6 weeks now that 1014 has either been a resistance point or smack in the middle of the weekly ranges. Theoretically we could have another several weeks where that would continue, or even if the price bars move up from here, where 1014 could then act as support before things finally move up and away. Look at the Fib 23.6 level at 880 - the S&P danced around that for 13 weeks (a full quarter of a year!) - 3 weeks as resistance and then 8 out of the next 10 weeks as support. In other words, it wouldn't be unusual for prices to continue to interact with 1014 for a while longer. No wonder the bulls are having a hard time getting through the 1030s!
I'm also beating a dead horse here - but the MACD-H divergence also shows on the weekly charts - higher prices - lower MACD-H. For an example of how the divergence works in the other direction - look at the location of the MACD-H during the November spike down last year - and then at the March low. Lower prices, higher MACD-H - and the downtrend reversed. That's why I believe in the MACD-H even though it's put egg on my face all spring and summer long. Take it for what it's worth - but it says to me that this is going to reverse. Or at a minimum, it makes it hard to make the bull case.
Current targets for market direction - above 1045 for the bulls - below 1014 for the bears. Deja vu all over again again - we could be here for awhile.
Good luck!