Today the mood on CNBC, and on stocktwits.tv was quite mixed. However, most of the experienced traders I know were surprised the market was down further. With a strong rise in the US Dollar, many of use felt the critical 1080 level might be tested, but it wasn’t. Between 1080 and 1085, you have 8 bounces off of support. We also have the 38.2% fibonacci retracement from the previous swing low to the current swing high, and the 50 day EMA. It’s pretty easy to see why this area is so critical.

In fact, today’s move represents less than a 1% move on the S&P 500. From a technical standpoint, the only two events of note is price crossing below the 20 day SMA, and the confirmation of the gravestone doji pattern put in yesterday. In fact, today almost put in a Marubozu, which combined with the gravestone doji is the most bearish indicator on chart:

S&P 500 Resistance around 1080 - December 17th, 2009

If recent price history repeats itself, I would expect the market to open at or near today’s close, possibly touch one of these important levels, only to bounce and close higher. The reason for this, I believe, is that the “Big Boys” are going to hold the market steady right here, in sideways purgatory, until the end of 2009 so they can send out nice account statements to their clients. There really is no other reason for these levels to hold given the massive bearish divergence which I expect to force the s&p 500 down in January.

Popularity: 1% [?]