Testing Resistance Day 2 – Market Analysis for 12/05/2010 by Singaporeseeds

That was a big bounce. The bounce over the last 2 days recovered almost 2/3 of the loss since this huge tank happened. Now we are looking at a standard moving average behaviour around the 50 day moving average. Usually when any stock or index makes such a big movement that strongly breaks the 50 day moving average, it will rally back up to the 50 day moving average to test resistance before continuing its downtrend. If it fails to break above the 50 day moving average, it will most likely break the lows of last Thursday. The markets spent the whole of last night testing the 50 day moving average and the monthly pivot resistance. I am expecting the indexes and most of the index stocks to continue to test and then fail to break above these resistances over the next few days. My first support for S&P 500 is at 1050, and the next is at 900.

Daily Charts for S&P 500