S&P Watch: Testing the Bounce
Can we hit the 200-month moving average?
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I don't always pay attention to the long view for short-term trading - not because I ascribe to the Keynesian idea that "in the long term, we are all dead," but because I believe longer term returns will take care of you if you're vigilant enough in the short term.
But like all technicians, I 've been paying close attention to this monthly chart on the S&P 500.
Click to enlarge
After the latest action in the markets, it's at a very important point, having already bounced to lateral trendline support after breaking it to the downside. (One might see different variations of this trendline; I prefer using closing figures.)
Some observations from this chart:
1. This is the moment of testing the mettle of the market. After being on a buy watch since March 2, we are the cusp of testing if the S&P 500 can take out this first break.
2. If the market can tread water here and not give back much, the bounce could last up to the 200-month moving average, which is the closest resistance.
3. Breaking the 200-month moving average has been a very rare event for this index.
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