Technical Talk: S&P 500 stalling at resistance

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The comments below were provided by Kevin Lane of Fusion IQ.

As shown by the chart, the S&P 500 Index still remains in an uptrending wedge (green lines); however, for the last two weeks the index has stalled under a secondary downtrend line (red line # 2). While two weeks of stalling at resistance is not a major concern yet, it does at the very least raise a cautionary note given the fact that the S&P 500 has had such a large, uninterrupted advance.

Weekly momentum as measured by the Relative Strength Index (RSI) has remained neutral while the S&P 500 has rallied. However, until near-term supports are broken near 1,050 and then 1,026 it is hard to get too negative.

So, to reiterate, some yellow lights are flashing but the bottom line is the trend is still up and remains intact and only a move below the 1,050 and then 1,026 level will be viewed as a negative.

From a portfolio management perspective we would tighten up stops on profitable positions and reduce (or hedge) long-side exposure if the above-mentioned levels are violated.

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Source: Kevin Lane, Fusion IQ, December 09, 2009.

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1 comment to Technical Talk: S&P 500 stalling at resistance

  • Frank W

    The markets look worse and worse as the weeks go by. Lately, every shot at the top by the bulls has been met by concerted selling by the institutions. Not a situation conducive to a continuation of the rally. Lane presents himself as too complacent.

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