It’s not surprising traders and investors are hesitant to put new capital into the equity market given the recent strong rebound that has, for example, just pushed the Nasdaq back into positive territory for the year. For more see page 1. Sure, many growth stocks are reaching well advanced levels, at least in the short-term, but I don’t see a lot of technical evidence yet that the uptrends are reversing.

What levels should you watch for signs that the rally is either extending or beginning to stall? The Standard & Poor’s 500 index (SPX) itself is at an interesting crossroad heading into next week, with last week’s highs at 2954. The 62% retracement level (from the low) between 2934 and 3002, the declining 200-dma, is an important resistance band that will need to be surpassed to keep the uptrend intact.

Conversely, this past week’s lows are an important near-term technical support level, given it lines up with the 50% retracement of the 1Q sell-off at 2792. Our expectation is that pullbacks, when and if they occur, are likely to be relatively shallow. I’d also highlight that should we see a pullback, there is considerable support for the S&P between its 50-dma (2730) and the rising 200-week moving average at 2660.

So what should an investor do now? I...

Unlock this article with a FREE 30-Day Trial!

An FSI Pro, or FSI Macro subscription is required in order to access this content.

*Free trial available only on a monthly plan

Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 2/2

🎁 Unlock 1 extra article by joining our Community!

You’ve reached your limit of 2 free monthly articles. Please enter your email to unlock 1 more articles.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)