Prove It To Me Market
As we outlined in a November 20 video clip, the “return to the year of the whipsaw” action in the S&P 500 over the last few weeks means we prefer to make the market “prove it” by clearing some overhead guideposts.
If the S&P 500 is to rally for several months and go on to make significant higher highs, it has to clear and hold above 2093, which is the R1 line shown in the chart below. The S&P 500 closed at 2089 on Tuesday, November 24.
When areas of possible resistance or signals occur on multiple timeframes they tend to be more useful. The R1 level on the weekly chart of the S&P 500 sits at 2095. The S&P 500 closed at 2089 on Tuesday, November 24.
The possible resistance trifecta is in play with R1 on the monthly S&P 500 chart coming into the picture at 2095. The S&P 500 closed at 2089 on Tuesday, November 24.
How Can This Help Us?
If the S&P 500 closes over 2095, does it mean we have entered bullish utopia? No. A single close or even a handful of closes over 2095 does not necessarily mean resistance has been cleared; there is no magic number of days. If 2095 is cleared and held, the longer the market stays above 2095 and the further it moves above 2095, the more relevant it becomes.