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S&P500 Back at Critical Resistance

Technical Update

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S&P500

December is starting on a good note for risk-on trades. S&P500 confirms risk appetite , as it came roaring from the 1148.25 low established last week. Friday 12/2, NFP reported 120K additional jobs in November, while the October number was revised up from 80K to 100K. Also, the unemployment rate dipped 0.4% from 9.0% to 8.6%. The decline in unemployment did not come from a surge in hiring, but rather a dip in the participation rate .

At the release, the S&P500 was at 1260 , kissing the 200 day simple moving average and 78.6% retracement of the 1228.75-1148.25 swing. This is a critical resistance . Although the market cracked a declining trendline , this 1260 level needs to be broken before risk-on can extend further.

Extension of risk-on will lead to USD and JPY weakness for December. The next resistance for S&P500 would be 1288.75-1290 area. Above 1300 , we have the summer highs near 1350 as a target.

If the week ends with a risk-off, it will be interesting to see if the S&P 500 can be supported above the 200 SMA seen in the 4H chart near 1230 . Ability to remain above is a bullish posture, and the the upside bias remains. Below, that we continue to consolidate, with bearish outlook strengthening if the market can break back below the 1200 clip. The post-reaction to today's NFP report will be important next week to decide the fate of the S&P500 as well as the direction of USD and JPY for the rest of 2011.

Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis , Education , Videos , Charts , and other trading resources.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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