S&P 500 Analysis for January 20, 2010

The market showed stability above the 113.20 level on Friday and then experienced a strong rally which impressively brought the market back to the high end of recent range and eliminated the possibility of a double top (see Friday’s chart).  The 5 day MA (red) is now in the approximate location as the mid point of the range and it should  be an area where buyers are likely to show up if the market encounters selling.  An ideal scenario would be a morning pullback which creates a short term higher low and allows the market to regain some energy for a break past the recent peaks of ~115.15  A move into new highs would then bring the R1 (115.60) and R2 (116.13) levels into play on Wednesday.

click the chart to enlarge