Now THIS Is Resistance
- Posted by TheArmoTrader
- on February 23rd, 2014
The Stock Market is sitting right below all-time highs. However, year-to-date, stocks are pretty much flat with the S&P 500 sitting at a -0.2% return. We started off the year chopping around, which I argued was a good thing. Then we saw a nice little garden-variety 6% pullback. We’ve seen several of these since our last market major correction in 2011. After that sell-off, we’ve seen a very strong and fast bounce back to the highs.
However, over the past several days the market has stalled. Which is not a bad thing for the bulls. In fact, this is really good. The market is consolidating through time and not price, which is usually more bullish. And on top of that, after an “expansion”, we’ve seen a “contraction”. And as we know, expansion leads to contraction which then leads to expansion again and so on. So you’d expect price to ‘expand’ from here. That means price will go two place, either up or down.
Given that stocks have been trucking on for years, it’s hard to bet that way is down. I mean, it’s certainly possible, but when you account for everything, the odds seems to be that we are headed higher.
$SPY – SPDR S&P 500 4-hour Chart
You can see, the $184.50-185 area has been acting as resistance. And while failing here and rolling over is possible, I am expecting a breakout and a continuation of the bull-trend. The more resistance gets tested, the more likely it is to break.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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