The bullish price action in the SP500 confirms the idea that the SP500 can reach unchanged (1253) or better by year end as long as 1) improving US economic data is maintained into the beginning of the New Year and 2) no new funding crises in Europe emerge. Both those pre-conditions were met yesterday, and the SP500 found itself up 2.5% in the morning.

1230 is half way back to the December highs. Half way back to any pre-defined range is very dangerous for traders and investors. Normal distributions would show the bulk of the activity occurring around the middle of the bell curve. But financial markets are not "normally-distributed." So, the 50% retrace to the December high at 1230 is not expected to offer much resistance at all.

Key Observations

1. The 60 min chart shows some important swing highs and lows in late November and early December forming around the 1238-1245.

2. The 200x4 p&f chart shows a bearish resistance line intersecting a bearish point of control area around 1236 today and the 60 min chart shows a shelf at 1234, 1234-1236 should act as resistance today.

3. The 50x4 p&f shows short term support near 1224-1225 and the 60 min chart shows last Wed's high at 1226. 1224-1226 should act as short term support. The backstop to 1224-1226 will be the blue bb average sloping into 1220 on the 50x4 p&f chart.

Click on image to enlarge!

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