SPX extended the 19-day consolidation (since 09 Aug YTD low) to form a potential bear flag. The recent advance stalled at 1230.71 (31 Aug) near the rising channel resistance (from 09/22 Aug lows/15 Aug high). The subsequent decline exposes 1135.91 (
Support 1) near the lower bounds of the channel then the key 1121.09/1101.54 support zone (
Support 2). A breakdown below there would open 1139.70 (27 Aug 2010,
Support 3) for a potential retest. It would take strength back above 1230.71 (
Resistance 1) to stabilize the market. An upside break there would re-open the significant 1249.05/1258.0 resistance (
Resistance 2) (former support, 16 Mar/16 Jun lows). Only reclaiming the resistance zone would allow bulls to target 1286.56 (
Resistance 3). near 76.4% retracement of the 1347.00/1101.54 fall.
Trading Indication:
Short-term (Intraday):
Sell at 1180.00 or higher
Target at 1100.00 and lower; Stop loss at 1203.0 (1.9%)
Long-term: Possibly buy lower
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