December 11, 2009
Both the S&P 500 Index (SPX), and it’s tracking ETF the S&P Deposit Receipts (NYSE: SPY), remain unable to surpass strong resistance that has held them in check since mid-November.
For the SPX it is at 1119.31 and for the SPY it is at 112.31. This is the 50% retracement of the entire 2008-2009 bear market decline for both and disbelievers of this rally find it the perfect level to take profits.
The SPX has made at least four runs at this level and pulled back each time. The SPY has also made several unsuccessful runs at it. Currently the markets are in rally mode again and likely to again test their highs.
Watch for a bearish reversal day to signal the start of another leg down. But also watch for a decisive close above the 50% retracement which would signal a new leg up is in the works.
A failure here and we could be in for weeks of corrective declines.
If the SPX and SPY cannot surpass these important levels by year end, we would expect to see sellers take the markets down early next year.
Disclosure: The www.fibtimer.com ETF Strategy has a position in the S&P 500 SPYDRs.