S&P 500 Morning analysis 8/18/09

The SPY is getting a little lift this morning and is currently trading up about 25 cents at 98.60 There is simply no way to know if this bounce will last but if it does continue higher the 99.40 area will likely be a battleground which shorts defend heavily. The SPY is tracing a pattern of lower highs and lower lows below the declining 5, 10 and 20 day MAs so odds suggest it is just a bounce this morning. The market will need time to reveal whether it can turn back higher, for now longs need to go very slowly until we have evidence of committed buyers. If support near 98.30 fails to hold a move down towards 96-96.50 seems likely.