SPY reversed sharply lower during the week to test the 201.65 8-week low (October 19, 2015), forming a trading range between 211.66 (November 2, 2015 high) and 201.65. A sustained break below the 201.65 area next week would offer scope for further downside towards the 196.33/195.03 gap area (September 28 high/October 5 low, 2015). Below lies the 190.73 support (August 31, 2015 low).
However, bounces off the 201.65 area would prolong the consolidation within the range and alleviate the short-term oversold conditions. If bulls manage to reclaim the 211.66 range ceiling, that would signal return of strength, extending the upleg from last August’s 182.40 low towards the 213.78 record high (May 18, 2015) for a retest.