I hope everyone had a great Martin Luther King Jr. day, for those who chose to celebrate or had the day off. Moving back in to the first trading day of this short week, the SPX is looking vulnerable. Last Tuesday we had a surge up to the 1295 resistance area and held there looking very weak through Friday. On Friday the market sold off sharply in the morning and regained around half that loss by the end of the day.
On the daily chart we are hanging below resistance at that 1295 area. On the lesser time frames we are sitting right below moving averages such as the 200 period moving average on the 5 minute and the 65 period moving average on the 30 minute. Finally, we have been oversold since the beginning of the year. Given all these factors I think this week we will probably see a small pull back. We are still above all key moving average on the daily, so I do believe we will then continue higher. If we break above that 1295.40 area we have room to run, but a small pullback first would be healthy.
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