1,000 On The S&P
The key short term level for me is 1,000 on the S&P 500.
If this rally is to turn into a significant, multi week, year-end surge, then 1,000 needs to be taken out and in the next couple weeks too.
We’ve only been able to close above 1,000 twice since the October 10 capitulation low: 1,003 on Monday 10/13 and 1,005 yesterday (Tue 11/4). It seems to represent some significant short term resistance: S&P 500 3 Month Chart.
From Tuesday 10/28 through Tue 11/4, six trading days, the S&P rallied powerfully, up 18.4%. 1,000 on the S&P represents a logical place for traders to take profits and people who are not believers in this bounce to sell.
I’m not too worried about today. The S&P is down about 35 points. But that only represents 22.5% of the 156 points it gained over the previous six sessions. Volume is pretty light and there doesn’t appear to be any urgency to sell.
But I want to see some real demand and buying push us through 1,000 in the next couple weeks. I’m expecting that to happen and if it doesn’t that’s a warning sign to me.