SP500 at a Major Crossroads

The week ahead will be a very interesting one indeed. The S&P 500 has now rallied nearly 175 points off that bottom set in late March. The markets have rallied 15% in 6 weeks. The SPX now sits right at the 50% retracement level from the all time highs set last year near at 1576.

On a more longer term basis, the S&P500 is bumping up against major resistance in the form of its 70 week EMA.

On a shorter term basis, from the highs set last year, we have nailed the 50% fibonacci retracement level and volume is fizzling up near these levels. Additionally, we are backtesting a major breakdown area as you can see on the chart. If this market is going to fail, it should do it right around here. Until we decisively break up through the 70 week EMA and also break through the 61.8% retracement level at around 1454, we are in a bear market. There are many gaps still open on this market and there is still one open near the lows. Odds are for the market to move lower in the next few weeks...there may even be fireworks to the downside and this may produce a buying opportunity of a lifetime. I will cover this in my next post. Bottom line, short term to intermediate term direction should be lower from here. On the longer term, this market has substantial upside. More later.