Market Trends: Why The SP 500 is Running into Headwinds
The S&P 500 has staged a power rally in recent months – rising to a high of 53% (on Aug 7) from its Mar 2009 lows. Recently, however, the S&P 500 seems to have hit headwinds and has trended sideways for much of Aug.
In my previous market trends post, I highlighted that the Fibonacci 38% retracement places resistance at 1014, and this has turned out to be fairly accurate as the index pushed to an intra-day high of 1018 on Aug 7 before retracting. In the short term, the index is expected to either consolidate or correct to about 930 points or 7% from its Friday closing.
The 3 Fibonacci (upward) Retracement levels shown below are strong resistance points, and they need careful monitoring. The peak was taken from the intra-day high of 1576 on Oct 11, 2007, while the bottom was taken from the intra-day low of 667 on Mar 6, 2009. Traders should wait for a definitive break above 1014 before buying into the broader market.