Recent SPX Rally Has Taken it Up to Falling Resistance

Prior to the market’s ~50 bps reversal lower into the close today we put up a post re: negative divergences b/t prices and momentum in the SPY 60 min chart, suggesting that in the very near-term, such divergences suggested a pull-back was likely.

Taking a step back even further and looking at the daily chart, we find the SPX has rallied up to material resistance that marks the index’s closing highs from 2007 and 2012.

A break above line (1) in the chart below on a sustainable basis would clearly imply the rally’s ability to continue onward.

However, until the SPX can break above line (1), we need to respect it for the resistance that it represents – especially with volatility having compressed as much as it has.