4200: an important level to pay attention to - wider look at S&P
My main view on S&P500 is that we're in a main bearish trend, that has been fought by the bulls since October, 2022, when prices started going up. However, this insurgency has faced a good deal of resistance, resulting in unstable volume, and back and forth moves. Despite all of that, the secondary trend kept heading north. It can be summarized using technical analysis by drawing an incipient uptrend channel formed by this situation (orange dotted lines).
This up move came with some factors that strengthened the movement:
These are important movements and one cannot simply look the other way and ignore them.
Now the prices are very close to approaching a new challenge, that is to overcome the resistance level at 4200. That, besides being a round number, was also the level of many previous bottoms and tops since more than a year ago (specifically since January, 2022).
Not only that, but it was also the pivot point breakdown responsible for confirming the beginning of last year's bear market (this is indicated in the chart by the violet arrow path and the explosion emoji).
All of this makes 4200 very representative for the current market, but it is also relevant for the current profit situation of many 2021 and 2022 accounts, since above this level such accounts would come back to breakeven, and that has the potential to re-inflate the euphoria between market participants that were waiting for such a moment.
I am longing to see what is going to happen here around this resistance level. An up breakout would be the final signal the bulls are waiting for the trend reversion confirmation and a sound continuation of the incipient bull market trend.
But this may not happen, and the strong resistance level could work out one more time, especially considering that we’re near the negative "sell in May and go away" seasonality. In that case, we could wait for the continuation of this sleepy congestion that has been happening, or maybe, with some more action involved, we could have the return of a roaring bear market.
This up move came with some factors that strengthened the movement:
- the breakout of the main bearish trend line;
- the breakout of the 200 simple moving average;
- a pullback to these indicators; and
- the continuation of the uptrend after the pullback.
These are important movements and one cannot simply look the other way and ignore them.
Now the prices are very close to approaching a new challenge, that is to overcome the resistance level at 4200. That, besides being a round number, was also the level of many previous bottoms and tops since more than a year ago (specifically since January, 2022).
Not only that, but it was also the pivot point breakdown responsible for confirming the beginning of last year's bear market (this is indicated in the chart by the violet arrow path and the explosion emoji).
All of this makes 4200 very representative for the current market, but it is also relevant for the current profit situation of many 2021 and 2022 accounts, since above this level such accounts would come back to breakeven, and that has the potential to re-inflate the euphoria between market participants that were waiting for such a moment.
I am longing to see what is going to happen here around this resistance level. An up breakout would be the final signal the bulls are waiting for the trend reversion confirmation and a sound continuation of the incipient bull market trend.
But this may not happen, and the strong resistance level could work out one more time, especially considering that we’re near the negative "sell in May and go away" seasonality. In that case, we could wait for the continuation of this sleepy congestion that has been happening, or maybe, with some more action involved, we could have the return of a roaring bear market.
