The Bullish scenario of the SPX index daily chart illustrated above presents the bulls with a short-term advance. Price is met with a confluence of resistance at the sloping downward 200 day moving average, trendline resistance, and a previous cluster point at the last minor high. A break above these three solid points of resistance would allow for a violent thrust to the upside triggering many stops for those with short positions. A catalyst is needed as we all wait and watch for Europe, and that may do it. However, any advance will be limited and short-lived as prices will fade and fizzle out when approaching newer and stronger resistance. The Head and Shoulders Topping Pattern that developed over a 5-6 month period is coupled with an overhead supply of retail investors anxiously waiting to recover their positions at a limited loss or break even. Remember, 75 % of investors will take a loss in the stock market over their lifetime, and only 1% of investors make half of the money made on wallstreet. Many of those retail investors buy at the tippy top and sell at the very bottom.
If price can reach the low 1300s I fully expect the MACD indicator to provide a well defined and glaring negative divergence to set-up. I have several posts for you today so stay tuned.