August 19, 2019 02:09 PM RSS

Technical Takeaway: Will 2800 Stay Resistance or Become Support

  • Wall Street Rebel | Geoff Garbacz
  • 02/25/2019 8:24 PM
Technical Takeaway: Will 2800 Stay Resistance or Become Support
A key consideration is will 2800 on the S&P 500 become support or remain resistance? It seems to many people are trying to call a top at 2800 so it may not be the end of the move.

This morning the first trade out of the box saw the S&P 500 open at 2804.35. Then it rose to 2813.49 before dropping to 2794.11 and then closing out at 2796.11. Last Friday the close was 2792.67.

The S&P 500 failed at 2800 in October (twice), November (once) and December (once). So the question that is on everyone's mind is will 2800 continue to prove to be resistance or will it rally from here to close above 2800 and then back a move back to 2850?

The fact is the pain trade for most investors is higher. Why? Simply the rally began the week between Christmas and New Year's Eve. Most investor were not paying attention and then when they came back after the new year everyone was a doubting Thomas. So investors on the long side are underperforming the rise in the S&P 500 that is now 11.54%.

On the short side, it has been a nightmare for the shorts. Most technically weak stocks from the end of 2018 have rally quite a bit and the shorts are struggling. As an example, General Electric (GE) from its close on December 31st has rallied 42.93%. From its December low, the move is 61.25%. If you we short from say $20 at the low of $6.71 your gain was 66.45% and it is now 45.90%.

The technicals are supportive of a move through 2800 with about a 70% confidence factor but any weakness and that percentage could fall sharply.

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