Strong Overhead Resistance Broken

November 14, 2006 · Print This Article

The S&P 500 (SPY) finally broke through the strong overhead resistance that has been in place for several weeks now. The 139 area in SPY has been rather troublesome for the bulls until today. The indice looked as though it would fall back again today once the area was tested then a massive surge in volume came through which led to a rally into the close. The talking heads said that the rally was triggered by a large insitutional program trade in the S&P futures contracts.

Keep a close eye on the 139 area in the SPY. If buyers move in and are able to hold the index above that pivotal area we could get a continuation of the rally. THe the bulls are unable to hold the 139 area then we could see a move back into oversold territory. With all of the major indices back in overbought to very overbought territory the upside momentum should slow down over the short-term. This could lead a false breakout. However, the bulls are in control of this market so buyers will continue to put up a fight with each attempt to push the market lower.

RSI Wilder (5) for November 14, 2006