Technical Analysis of S&P 500 for 1/4/10

The SPY broke down through support at 111.80-112.00 on Friday and that makes the recent breakout highly suspect. The market is now back into the range that tormented traders the last part of the year and if the market finds resistance near 112 again we will be looking at a lower high which could embolden sellers to push the market lower into the first part of the new year. The mid-point of the range (110.50 ish) would be the first downside level of support, followed by the trendline (near 110) which was formed along the late November- mid-December lows. 110 would also become a level of focus for many participants as that is the approximate location of the rising 50 day moving average (see inset chart).

Click chart to enlarge