By Surly Trader
Since there is little else to hang your hat on, we will look at the technical levels for the S&P 500. In June of this year, 1257 served as a powerful floor that propelled the S&P above 1350 in July. In August, this same floor was broken sharply with a run down to 1100. Since then the S&P has been range bound and has now made a pattern that looks like a megaphone bottom:
Lower lows alongside higher highs with a final breakout to the upside
S&P 500 showing a megaphone bottom?
In the last few days we have seen a strong test of the 1257 level from the other side of the trading range with a high on October 24th of 1256.55. So far, it has certainly seemed like we have bounced off of this 1257 barrier.
It is an interesting pattern because I could see the markets trading in either direction…a strong break upwards through 1257 or a sharp move lower to trade once again at 1050. Two vastly different outcomes hinging on the political brinkmanship of Europeans. I have taken some chips off of the table and this level because it feels more like betting on red or black at the roulette table.