By Andrew Nyquist
After breaking out above the 1420 level, the S&P 500 ran to 1474… and quickly. Most breakouts tend to get a bit euphoric at first which, in turn, leads to a quick sell off or backtest of the breakout area. This is a means of confirming of that breakout.
The chart below shows a similar patterning happening on the S&P 500; it came down to retest the breakout area and is now moving higher through downtrend resistance. Big question here is whether the index will break above old highs (1474). If so, open gaps at 1478 and 1497 will serve as magnets.
Trade safe, trade disciplined.
More charts found here.
S&P 500 chart with technical support and resistance levels as of October 4, 2012. S&P 500 technical breakout and analysis.
No position in any of the securities mentioned at the time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.