The SPDR S & P 500 ETF (NYSE: SPY) failed to move above key technical levels on Monday. But today is another day, and another rally attempt is possible given the posture of the very early action in the stock index futures.



Chart Courtesy of StockCharts.com



The key levels on the S & P 500 are 1043 as support and 1100 or so as resistance. There are also some significant technical developments to consider here.

One is that the S & P 500 and SPY are making lower highs and lower lows, defining a down trend. The other is that even though the market is oversold, the 20-day moving average has crossed below the 50-day moving average, and both lines are heading down.

Usually, those are signs of further weakness ahead. That means that we are now in one of those markets where there are three possibilities. One is that we get a retest of the bottom and it holds. The other is that we've already had a successful testing of the bottom and we go higher.

The worst of the three is that the rally attempt fails again, as it did on Monday, and the bottom near 1043 doesn't hold.

We're not sure of anything beyond that, which means that this is a good time to be very cautious.

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