S&P 500 Surges to Pivotal Resistance- Decision time for BullsThe S&P 500 has rallied nearly 3% off the monthly low and is approaching the first major test of the late-October downtrend. Resistance is eyed at 50% retracement of the decline at 6715 and is backed closely by the 61.8% retracement at 6764. A breach / daily close above the August trendline is needed to suggest a more significant low is in place with subsequent objectives eyed at the monthly open at 6842. Key resistance remains unchanged at 6911/986.
Support rests with the October low at 6500 and losses below this threshold would threaten resumption of the near-term downtrend with the next major technical consideration seen at 6408/21- a region defined by the 1.618% extension of the October decline and the 23.6% retracement of he yearly range. Look for a larger reaction there IF reached.
Bottom line: The S&P 500 is approaching downtrend resistance early in the week and the outlook remains tilted to the downside while within this formation. Look for a reaction into 6715 for guidance in the days ahead. From a trading standpoint, losses would need to be limited to the monthly low-day close / weekly open at 6574 IF price is heading for a breakout here with a breach above 6764 needed to fuel the next leg.
