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The S & P SPDR ETF (AMEX: SPY) is within striking distance of 140, which means that the S & P 500 is just below 1400.
Chart Courtesy of StockCharts.com
This is a big chart point, as it's not just a round number, but a big psychological area for the market. 1400 seems to be the line in the sand for traders, hoping that a close above this chart point will bring in sideline money.
A more important chart point is around 1440, the 200-day moving average for the S & P 500. But, as history shows, taking out the 200-day moving average usually takes a bit of strength.
Which is why taking out 1400 is important, since this would provide the impetus for building enough momentum to take prices above 1440 and the 200-day moving average, the line that divides bull and bear markets.
In other words, despite the recent rally, and the fact that the market may have bottomed, it is still trading in bear market territory, ie. below the 200-day line.
There are still lots of doubts on Wall Street about whether this is a clear market bottom or a bear market rally. And that's why a convincing move above the 200-day moving average could make life a whole lot easier for the bulls.
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He is the author of four books: "Futures And Options For Dummies," "Successful Energy Sector Investing," "Successful Biotech Investing" and co-author of "After-Hours Trading Made Easy."
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