Break of 1,265 Could Open 1,285 to 1,340
We use a much larger version of the chart below, but the basic areas of possible resistance can still be discerned. A break of the 200-day and/or the 1,265 region could see a quick pop toward 1,285ish. The next areas of possible resistance come in near 1,315 and 1,340ish. The uppermost blue trendline is drawn from the October 2008 highs. The S&P 500 could move toward 1,340 and still remain within a downtrend from the 2008 bull market highs.
Since resistance could be formidable near 1,265, some type of news event would most likely have to push stocks above that level. The event logically could come from the Fed, ECB, IMF, or bond markets. Some better than expected economic news from Europe is also a possibility. Given the fundamental backdrop (mainly Europe), we believe any gains will be short-lived and fully retraced, but it is important that we keep an open mind as things unfold.
