For now I am looking for this current level to hold. The 1294 level on the SPX was the low on 2/24/11 and also January's resistance level. If this level breaks down then I would look for further weakness to the 1280.81 area which is the 127% Fib extension as depicted by the aqua blue lines. That area is also somewhat consistent with 1275ish area that was printed on the Egypt lows back on 1/28/11.
The red line depicts the short term upside resistance. The yellow line depicted the shot term uptrend support. Together they formed a pennant which has been pierced to the downside and might bring further downside resolution to the previously mentioned areas.
SPX Daily Chart
On the weekly chart you can also notice that the the trajectory of the green uptrend line from the August 2010 lows has temporarily been punctured to the downside. This also offers reason to be concerned for a possibility of greater retracement. However, the yellow line that is depicted on the weekly chart does offer some short term support. Again if these areas give way, I would anticipate a further retracement to the lows that were printed on 1/28/11 as a result and reaction of the Egypt crisis
SPX Weekly Chart
Now as we are looking at the weekly, we can see that the dotted green line is a longer term uptrend line of support. Price or time will dictate when and where we will eventually tag that uptrend support line. I am looking for the latter to transpire. I am inherently bullish being an optimist but I have to put my feelings aside and trade what the charts are showing me. If we take out the Egypt lows convincingly then I would look for a further pull back to the April 2010 highs which at one point acted as resistance to be another area of support. That area is identified by the dotted red line and comes in at about 1220 on the SPX. If that is the case I will look for bearish setups, for now I will use the futures to hedge intra-day and short term intra- day shorts.
SPX Weekly Chart
