A Time for Caution and Respect ...
It Tas been a rally with no significant upside resistance for the S&P 500 ... until now.
In 2007, the market started its journey down in a ride where many investors where afraid to jump off of the moving train. Since March of this year, many have left their fear behind as the S&P moved up once again in a rally with Government and Fed rhetoric singing songs of "the recession is over".
That was nice ... but there was very little overhead resistance to stop the rally.
But now, for the first time since March, we are challenging a very formidable resistance level as seen on today's chart.
It is not "just any resistance" ... it is a Major level that was in existence before the market had its big plunge after last September. And now we are testing that resistance. In fact, the S&P 500 tested that resistance last week and pulled back.
The testing is technically still in play because the S&P has recently been making higher/highs and higher/lows. That is the definition of an up trend, so the failure to penetrate the resistance was not official and can't be unless a down trend begins.
Until then, the S&P has the possibility to retest this Major resistance level. Since this is a Major resistance level, it is a place where caution and respect is warranted.