Anyone who says they know exactly where the market is going in the next couple of weeks isn’t being straight with you. As we look at what is happening in the market with the fiscal cliff negotiations, with the negotiations we’re going to have to have over the debt ceiling and everything else that we’re looking at, we really have to wait and see where things are going to be going.
So, looking at the chart of the S&P 500 from Wednesday’s trading session, the level of 1,400 is what we want to watch because it has proven in the past to be a very successful support level for us and could be a resistance level for us in the future if we do end up dropping down below it. However, as we look at the chart for today, you can see that by the end of the trading day, we had successfully pushed up and off of this level on the S&P 500; 1,400 held up as support.
The S&P 500 was actually dipping right below that level, which sparked a rally on Wednesday that sent the market up higher at the close. The market opened trading on Wednesday, then started to drift down but as soon as it dropped down below 1,400, it triggered some buy orders at that point, and the market shot up like a rocket off of those levels. That tells us that the bulls on Wall Street are not ready to roll over and admit defeat.
They do anticipate that there’s going to be progress made on the fiscal cliff negotiations, and they are willing to buy into stocks and buy into the market when it does drop down to lower levels. The S&P was under 1,400 for a little more than five minutes before there was enough buying pressure to reverse the initial downtrend and send the market up higher. It drifted off a bit, but the index closed well above the support level at 1,400.