January 8, 2010
Both the S&P 500 Index (SPX) and it’s tracking ETF the S&P Deposit Receipts (NYSE: SPY) are at new rally highs, both have surpassed important resistance levels, both have higher highs ahead.
A few weeks ago we wrote “What Happened to the Rally?” Apparently it was alive and well, but waiting for the year end holiday period to kick start it back into action.
The 50% retracement of the entire 2008-2009 bear market decline was at SPX 1119.31 and for the SPY at 112.31. These resistance levels held the advance in check from mid-November until finally they were surpassed during the two week holiday period.
In our chart studies we watch support and resistance levels closely. When broken in either direction, the markets tend to move to the next support or resistance level.
In this case, the SPX should continue higher to the 61.8% retracement level at 1226.10 which is 7.4% higher than Thursday’s January 7 close. The SPY should make it to $122.98.
Disclosure: The www.fibtimer.com ETF Strategy has a position in the S&P 500 SPYDRs.