S&P 500 bearish below 1077

• tradingpoints
• February 6th, 2010

Prices traded well below 1063.50 weekly symmetry support on Friday, touching 1045 before rallying back above 1063.50.  For the bears, exceeding the -87 point 4 week decline of Jun-Jul ‘09 was evidence that much lower prices are in the offing.

The bulls would argue the inability to close below 1063.5o, on a weekly basis, should be viewed in a more constructive context. Prices were clearly rejected at the 1045 lows and have corrected just about -10% from the recent highs.

Looking at the decline in a larger context, the S&P is currently retreating  from an ideal 50 – 61.8% monthly Fib retracement in Time and Price measured from Oct ’09’s 1576 all time high to the Mar ‘09 low of 667. The recent sharpness of the decline and weak counter-trend bounces in the last month argue in favor of the bears and for further lower prices. How much lower is anyone’s guess, but as long as prices remain below 1078-85  on a daily close, the daily trend is bearish.

If the current decline is limited to above 990, then this current decline could be seen as a normal pullback  in the rally from the Mar lows. While a push below 990 confirms a break to lower Fib support levels of 965 and lower. (see weekly chart below).

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