S&P 500, Dow Jones Rally Pressing into Zone of Resistance
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Dow Jones & S&P 500 Highlights:
S&P 500 hits the 200-day MA
The S&P 500 finally hit the widely-watched 200-day moving average for the first time since March 5. The anticipation is that there could be some struggles around the threshold even if price is to continue its upward ascent.
This shouldn’t be totally surprising as the moving average is considered a bull/bear market line-in-the-sand and the fact that the market hasn’t really gone anywhere the past few weeks or so. It wouldn’t take much to turn the S&P down back inside the recent range.
From a tactical standpoint, longs look to have poor risk/reward until we see how the market wants to handle resistance, whether that results in heavy selling or a drift lower that implies the decline is only a pullback. Aggressive short-term traders want to look to position short if the market starts to weaken here.
S&P 500 Daily Chart (200-day MA)
The Dow Jones is pressing up against the underside of the trend-line from February 2016, a line that kept a lid on the market’ advance at the end of last month. Will it do it again? If not, then look for the March 6 gap to fill up to 25865, with the 200-day not too far beyond there at 26305 and falling.
But with the broader S&P at the 200-day the market might at least experience a little weakness before being able to forge on higher, if it can at all. Watch for a sharp turn lower as a cue that stocks are headed for a correction or worse.
Dow Jones Daily Chart (underside of 2016 trend-line)
Dow Jones Chart by TradingView
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.