S&P 500 Strong Support @ 1100The longterm focus is on what I saw as a critical market level that was immediately at hand - the 160-month moving average of the S&P 500 Index (SPX).
On March 31, the SPX closed at 1,169, clearing its 160-month moving average by 7 points. This was not exactly a "huge clear," but the market has continued to press steadily higher and we saw about 20 points above that benchmark.
However, the recent Greek and Euro fisacos had sliced the SPX down to 1135.68 points last Friday close. But, at least for now, we are shaping up for another "clear" hopefully within the months of May & June looking forward.
Since we are focused on monthly averages, a couple of weeks of pullbacks, corrections & consolidations are the norms. Technically, no major breakdowns are evident in the SPX main trend. The Support Line (green) indicates very strong support at the 1100 mark.
Note that the last time the SPX closed above its 160-month was in September 2008, and the break the next month was followed by a major downside deluge.
While I'm not suggesting that the upside penetration will evoke a similar reaction higher, I believe this could be the ticket to an assault in the coming months on what could well be the next major S&P resistance level - 1,332, the doubling point from the March 2009 low. At such time as we reach that point, it will be very interesting to sentimenticians to see if the bearish constituency will throw in the towel or will – if you'll pardon the expression – "double down."
ALL THE BEST FOR JUNE 2010
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