S&P 500 remains range bound after strong week

Strong week for stocks, as the S&P 500 rallied over 100 points after the down day on Monday and test of support of Tuesday.  The index closed out the week at 1104.51.  Overall the market remains contained within a range, and is not a long-term trend trading environment.  Support being found at 1040 on the S&P is a good sign for the bulls, at the least for the moment as it means a higher low than the one seen in early July.

Yet as mentioned this is a ranging environment, the 1040 level has been significant on multiple occasions.  Support there shows this market remains range bound.  The index is now heading for a test of resistance (the upper part of the range) at 1130-1132.

Movement beyond that upper band indicates a breakout to the upside.  False breakouts remain highly likely in this choppy environment, yet even a false breakout could break the upper resistance by 20 points or so before retreating-just as we saw on the false downward break in late June early July.

A legitimate breakout out in either direction, either through 1040 or 1130, sets up a target of 950 or 1220 respectively.  These are longer term target as the weekly average (14) movement is 47 points.

Short-term bias is up, yet warrants caution until the market moves through the resistance area since we will need a higher high to confirm that a trend is indeed in place.

Chart is below.

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SP-500 Daily, FreeStockCharts