S&P 500 Morning Analysis 10/6/09

The SPY bounced strongly from the conjunction of the trendline connecting the lows from mid-August to last week and the location of the RISING 50 day moving average. The volume of the rally was light relative to the days where the market sold off and it was also below the 20 day average, but as we know, only price pays. The 104 level was our primary level of potential resistance, but this morning the market is trading just below 105, which emphasizes why we call it potential resistance until prices have actually backed away. We will now look for 104 to become support again and the downtrend line near 105.80 is our next potential resistance.