Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

Going into yesterday’s trading session, we thought that since 1,200 on the S&P 500 has more or less held as resistance, Tuesday’s session might turn out to be one of consolidation. After volatile trading intraday, the theme of the day indeed was “consolidation.” Mixed signals from weak overseas GDP numbers, the Sarkozy/Merkel news conference, upbeat forecasts from Home Depot (NYSE:HD) and Wal-Mart (NYSE:WMT), and the reaffirmation of the United States’ AAA rating by Fitch was enough to whipsaw even the best traders.

For the second day in a row, the S&P 500 attempted to close above the crucial 1,200 mark. While technically it did close above it on Monday, it just didn’t do so strongly enough. If it does, the next targets to the upside remain 1,220 followed by somewhere between 1,240 and 1,260.

From a risk management standpoint, the more this oversold rally continues, the more I am selling leftover longer-term positions. On a solid daily close above 1,200, I might be inclined to add a little short-term long exposure with stops just below 1,200.

The Nasdaq 100 has also reached a significant first resistance level of 2,200. It too must first overcome this level if traders want to add quick longs. If and when the NDX overcomes 2,200, it could rally as high as 2,300 before running out of steam.

The transportation stocks as measured by the iShares Dow Jones Transportation Average Fund (NYSE:IYT) lagged in yesterday’s performance and is moving into an initial (albeit minor) resistance area (blue line). Also note how on this weekly chart the index bounced off the 38.2% Fibonacci retracement line of the entire 2009 to 2011 move up. The transports flashed an early warning signal in early July with a clear candlestick signal and turning down the chart shortly thereafter. We will continue to watch them for leading signals, including when the current oversold rally may be coming to an end.

The iShares MSCI Emerging Markets Index Fund (NYSE:EEM), like most other equity indices, dropped sharply in recent weeks. As of Monday, it has retraced 38.2% of the sell-off and, as such, is worth watching. If it doesn’t find resistance here, look for the $43 and finally $45.50 as an area of resistance. Emerging markets have gotten hit hard recently, andRussia andChina are officially in a bear market by traditional measures (20% off the highs).

All in all, yesterday’s breather session was to be expected; after all the S&P 500 Index had rallied almost 8% in the three days prior. Major equity indices remain somewhat oversold, and it is likely we will see higher levels in coming weeks. At some point, however, the broken longer-term charts will throw their full weight against investors again and push stocks lower. I will continue to monitor individual sectors and other clues for when that turning point may be nearing.

• See Sam Collins’ Daily Market Outlook: How Deadly is the S&P’s Death Cross?
• See Sam Collins’ Trade of the Day: Get Out of General Dynamics While There’s Time
• See Serge Berger’s Trade of the Day: RIMM Almost Ripe for the Picking