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S&P 500: We’ve Hit Long-Term Resistance, Now What?

ByAndrew Thrasher
Published 04/17/2013, 02:20 AM
Updated 07/09/2023, 06:31 AM
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Recently I’ve tried stripping away some of the noise and looking at just price action. Today I want to focus on the monthly chart of the S&P 500 (SPX). With the recent breakout high we have run smack into the slightly rising trend line that connects the 2000 and 2007 peaks. I had said I’d be surprised if we didn’t at least hit the 2007 high, but when long-term resistance like this is hit it’s unlikely to break on the first attempt.

So now what?

The last time we were at these levels we saw a period of multi-month consolidation. We can’t know for sure if that’s what we will see for 2013, but we will look at market internals to get a better idea of where things might be headed. Momentum (RSI Indicator) is still rising and has yet to diverge – which is one positive for a continued move. What’s important is to take the step back and see the long-term resistance and not expect the market to power through it on the initial approach.

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I’ve had an internal fight about whether to bring this up or not… Looks like we had a Hindenburg Omen trigger yesterday. I could be wrong (wouldn’t be the first time), however it seems ZeroHedge picked up on it as well.

I last wrote about a possible ‘sighting’ of the Omen last summer. I found out that I was misinterpreting a portion of the Omen’s criteria and that the Ominous Omen did not in fact trigger. Although, the part I got wrong last year, I believe is correct in trigger right now. Does it Matter? Many would argue it doesn’t. ZeroHedge is looking for another trigger to create a cluster, like we saw in October 2007. I’ll leave you to come up with your own take on the Omen’s validity.

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