As you can see in this SP500 Futures chart we have had a nice upward channel to trade in with higher lows showing us support and higher highs showing us when to take profits. Now, as I have point out in this chart we are quickly approaching an strong area of resistance in the S&P 500 at the 1410-1420 level.
Not only do we have a rising 50 and 200 day moving average to act as support on any pull back but also the implied support trend line as well. I would anticipate to see the SP500 rise to that 1410-20 area and drop down as people who went long in April and May will be looking to get their money back…assuming their poor traders and did not use stops. Yes there are a lot of those and you need to think about people who do not trade as intelligently as you and I do.
If you do not have any open positions right now I would suggest waiting for a test of support which will be around the 1357-58 area and then look to get long for a possible break out of the 1420 area to which the market would have open territory.
Considering the market does break out the next level of resistance would be at the 1440 which we had a high of back in 2008 and then a 10 yr high of 1576. It seems weird to think we could be back to these levels but for a world market with anemic growth ahead I feel a sideways trend would be expected.
Either way use your stops and stick to your trading plans and you’ll do fine. I would start to look for stocks that are at support and may bounce as the market moves higher.