Three “Speed Bumps” for the S&P 500

We had a big jump in the S&P 500 today, with the index opening at the nice, round 3000 level. This level hasn’t been in play since March 5th. But we are seeing multiple speed bumps for the index after today’s move.

The first speed bump is the 3000 level itself. These round number levels are consistently reacted to by the market, so we’ll have to watch closely as the index closed just below it.

The second speed bump is related to the first one. We marked a red line on the S&P 500 chart to show that the index found resistance just above 3000 in the fall of 2019. In fact, today’s high touched the resistance line and pulled back to honor it – at least for today.

And of course the third speed bump would be the 200 period moving average. While the S&P 500 was able to close just above it, that is far from a significant break of this important indicator.

Watch tomorrows activity on the index closely. If the index is able to clear all three of these speed bumps, buyers should come into the market with force. But if it honors these hurdles, we will fall back into the range of the last few weeks with more sideways movement to come.

Jeff Drake
True Edge Trading