S&P 500 Index (SPX) Fails Again at Resistance Says Market Timer Frank Kollar

December 19, 2008 (FinancialWire) (By Frank Kollar)

The S&P 500 Index (SPX) reached a milestone this week, the 50-day moving average, and closed above it on Tuesday in a huge rally sparked by the Fed's cutting of interest rates to near zero.

The problem with the rally is that it does not seem to be holding. There was no follow-through. And on Thursday, December 18, the SPX closed back below this important indicator. Worse yet, the selling has occurred on greater volume, on each of the past two days, than the volume on Tuesday when the rally occurred.

There are other worrisome chart indicators such as the Fib 61.8% retracement level at SPX 907, considered a critical resistance level, that has now failed twice. It was reached on December 8 and December 12. Both times followed by a selloff.

The CBOE Market Volatility Index (VIX), a measure of fear in the markets, has declined every day since (and including) Tuesday. This indicates a lack of fear and is a bearish indicator for contrarians.

The market could still rally from here, but the risks are great. A bullish position could quickly cost traders a fast and substantial loss if the market breaks lower. Cash is a good option right now.

Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.

Go to previous Press Releases & Trading Notes.