S&P 500 Levels & Analysis for 3/24/10

The SPY closed at a new high on Tuesday as late day buying pushed the market past short term resistance near 116.80, we will  now look to that level as a potential level of support on pullbacks.  Every dip in this market has proven to be a buying opportunity and while it is foolish to fight the strong trend, it also creates a dangerous sense of security that a decline will not hold.  On Tuesday I mentioned on twitter that the market seemed to be getting “too easy” to the upside and that brought some questions about whether I thought a reversal might be at hand.   The answer is NO, there is simply zero technical evidence that sellers have gained any advantage, especially when the market closes as strong as it did.  The point was that when the market seems easy you need to be sure to have a plan in place for realizing profits so you are not caught off guard when a stronger selloff does eventually take place.  The path of least resistance remains higher and as long as higher lows hold the market remains “innocent until proven guilty”.  Below 116.80, support should be found near the uptrend line ~115.60 and the larger level of significance is the recent support/January highs near 115.10.