Let’s take a look at where the S&P 500 has been, where it is now, and where it might be going. Options trading investors may have noted that current prices in the S&P 500 Index Options (CBOE: SPX) are sitting on the edge of a fence. We could be looking at an intermediate bottom or it could end up being a bull trap.
My recent prediction for lower prices has indeed come to pass, but from hereon I have no real idea where price action is headed. Mr. Market is leaving a few clues behind which I will outline, but anything is possible. We have seen stocks climb a wall of worry for nearly two years now so there is precedent for a rally from this current point of indecision.
The daily chart of the S&P 500 below illustrates key technical levels on the daily chart; however readers will notice that we are currently caught between a ton of overhead resistance and a key support level. Until we see price move in either direction with volume confirmation, I will be sitting on the sidelines.