S&P 500 Has Clear Resistance & Clear Support

But will we test those areas today?

Technical Edge 

• NYSE Breadth: 33.5% Upside Volume

• Advance/Decline: 36% Advance

• VIX: ~$15.75

It paid not to panic and freak out yesterday. While the S&P violated last week’s low, that mark was eventually regained and we rallied into the close. Down five of the last six days and the bullish momentum has fizzled in the short term. 

Yesterday’s pop in bonds is something to watch. The rally let us trim ½ our long position, but if we can continue to get a dip in yields, perhaps there’s a little more juice in bonds (and potentially stocks as well).  

Let’s keep today’s intro short and get right into the levels.

SPY

I would really like to see a back-test of the $443-44 area, along with a test of the 10-week ema and possibly the 50-day sma. That would be healthy price action and give bulls a juicy R/R. 

On the flip side, keep an eye on the $451 to $451.50 area. That was prior support and has been stiff resistance for the last four sessions. A close back above the 10-day and 21-day moving averages (and thus $451.50) could open the door to $453, then $455.50 (gap fill). 

• If we push the edges of these zones — either down into support or up into resistance — keep an eye on breadth. If it’s not convincingly bullish on the rally or startling bearish on the decline (so essentially, breadth between 30% and 60%) then it may pay to consider a fade from these support/resistance zones with some 0DTE or 1DTE options. Of course, traders not comfortable with options should not consider this approach.

• Upside Levels: $451 to $451.50, $453, $455.50

• Downside Levels: ~$446, $443 to $444

SPX

• Upside Levels: 4520, 4535, 4550, 4567

• Downside Levels: 4475-78, 4464, 4450-55, 4525

S&P 500 — ES Futures