Technically SpeakingAn overuse of any particular market tool will lead to underperformance, that is historically proven. However, I believe it is important to identify critical technical price points for the overall market, as reflected in the S&P 500 Index, two or three times per year. The last time I touched on the "technicals" within the overall market was during the July bottoming process. It is time to check in on the technicals once again.
The current rally in the S&P 500 Index is now approaching a critical price level, known as resistance. The chart below identifies the resistance area as 1180.00 to 1181.75 in the S&P 500 Index. The good news is that a close above 1181.75 suggests further market appreciation toward, and most likely above, this year's 1219.80 April 26 high by year's end.
The relevance of this resistance area is that during the spring it acted as a support zone for the market's advance toward the yearly high on April 26th. However, once violated with price action below 1180.00, the market began its "Baseball Season of Frustration" decline. For 5 months, the market has languished below this major resistance zone at 1180.00.
So, I encourage Investors to watch closely as the market challenges this resistance level. If you are a frequent reader of my commentary you can probably guess what I think will happen, but the market must prove itself first. Next stop, 1180.00-1181.75. The proof will be in the PRICE!
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