Despite the recent sell-off in the market, when all is said and done, the S&P 500 is still caught in a range between 850 and 950. As I mentioned at the beginning of the week, if 850 is breached, the retest of the November low will likely occur. The longer the index stays in this trading range, the more significant a breakout in either direction.

There is some evidence to indicate this breach of 850 may occur soon. The McClellan Oscillator, while is poised to cross the zero line- a bearish signal. Moreover, the more an area is tested, the more likely a breach will occur. This area has been tested numerous times on the index.

Now is not a time for position traders to enter long positions. If one does hold stocks at this moment, tight stops should be utilized.

By Kingsley Anderson

http://tradethebreakout.blogspot.com

Kingsley Anderson (pseudonym) is a long-time individual trader. When not analyzing stocks, he is an attorney at a large law firm. Prior to entering private practice, he served as a judge advocate in the U.S. Army for five years and continues to serve in the U.S. Army Reserves. Kingsley primarily relies on technical analysis to decipher the markets.
Kingsley's website is Trade The Breakout (http://tradethebreakout.blogspot.com)

© 2009 Copyright Kingsley Anderson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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