By John Pisanchik

Well, today fizzled! That all important resistance level of 885 (in round numbers), that I spoke of yesterday, held in the S&P Cash. The market did try to go higher, topping off at 888.70, but then came off and chopped around between the high and 884 for around a half an hour before it finally started to break down. Each time it went lower, it tried to rally, but failed, and we ended the day close to the days lows.
As I said yesterday, we needed to get above 885 and hold. That clearly did not happen. Tomorrow there may be an attempt to run at that level, but that is uncertain as a call. The fact is that this rally is getting tired, and extreme caution needs to be the operating basis here. We are still in a bear market, nothing has changed there, but we have been in a rally. If the 885 level could be overcome to the upside, it increases the chances of a continued bear market rally. The longer we stay below 885, the more likely the next move down will start.
So here is what to look for in tomorrows market. If the market is really bullish (which I don’t buy) it must rally straight away and get through and hold above the 885 level. That is not outside the realm of possibility, I just don’t think it is likely. So if weakness continues tomorrow, then there are a couple of support points to look for as the market trades lower in the short term. The first is the 863 (approx) level. This was an important resistance level on the way up yesterday, so if the market has some resilience, then this point could stop a decline. If that point does not hold, then the 850 to 855 range is the next band of support. The market spent some time chopping around there the other day. If 850 fails and the 847 level does not hold, then we open the door for a continued move down. On April 23, 2009, I said there are some levels that could provide some support and they are: (S&P Cash) 835, 830, 790, and 741. I am also going to include 701 as a point of support, however after that point it is free and clear for a straight shot to 670. Now, I am not saying that we are going to be at 670 tomorrow. I am saying that if the trend turns down, that would be an intermediate objective, (a few weeks) and these support points are important and should be watched. Please note that the 835 level is a key level, and breaking that to the downside would be extremely bearish. Well I did say that the market today and tomorrow should be exciting. I think it was today. Lets see what tomorrow will bring.

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