SPX S/R for 8-8-11

Strong SPX drop last week, slicing thru the start of year number at 1258, then the pre Lehman bankruptcy level at 1252, then broke the final support level for 2011 which was the 3/16/11 LOD at 1249.  All gone in a flash, but then it got serious.

Next major support was 1235. This held for a day but crumbled under the selling as well. At this point some hedgies lost their grip, those that had a net long posture getting bludgeoned mercilessly.

Once 1235 was lost, 1220 tried to place a floor, it failed as well.  Thusday's close was 1200, a place to park until the jobs report would hit in the morning.  Friday morning brought better-than-expected job news which initially bounced the markets, but, the selling accelerated again. Some selling was expected due to margin calls in the early going but buoyancy would have been expected after that.  Instead, the S&P downgrade rumor circulated the desks and a dark cloud on the trading day played out.

There is major support at the SPX 200 week MA at 1158. The LOD Friday at 1168 now takes on vital importance moving forward, this 1150-1170 now a key area of support.

The S&P downgrade news is probably priced in for the most part.  If Euroland announces a new deal on Sunday, the markets will look forward to a snap back rally.

For Monday, the market bears need to drive down to the 1168 level again if they expect any serious selling to continue. This represents a 32 point loss that does not look likely, although a check on the Sunday night futures will shed light.  Watch the 1197 and 1192 levels closely on Monday.

The bulls have to move back above 1218 on Monday to get the snap back bull rally started.  If 1218 is hit, then the buyers will return in force driving the indexes up several more handles in short order and everyone will take a sigh of relief.  A move thru the 1170-1215 range represents a standoff sideways day with no resolution; the tension will continue.  

·        1268

·        1262

·        1258-1259 (1257.64 is the starting number for 2011)

·        1257 (3/16/11)

·        1252 (9/14/08 pre-LEH bk)

·        1249 (LOD 3/16/11)

·        1247

·        1242

·        1235 (12/15/10; also HOD 12/7/10 large volume)

·        1233 (LOD 12/16/11)

·        1227 (HOD 11/9/11)

·        1226 (11/5/11)

·        1224 (12/7/10 large volume)

·        1220 (HOD 4/26/10)

·        HOD on Friday 8-5-11; 1218.11

·        1217 (4/23/10)

·        1209 (HOD 4/29/10)

·        1207 (4/29/10 Top)

·        1206

·        1200

·        Close on Friday 8-5-11; 1199.38

·        1199

·        1197

·        1192 (9/15/08 post-LEH bk)

·        1187

·        1183

·        1180

·        1178

·        1175

·        LOD on Friday 8-5-11; 1168.09

·        1168

·        1163

·        1160

·        1150

·        1145

·        1140

·        1133

·        1121

·        1115

·        1104

·        1096