S&P 500 consolidates gains at critical resistance

<p>The S&P 500 (daily chart) has consolidated its recent gains right around the critical 1850 resistance area after having spiked to a record high near […]</p>

The S&P 500 (daily chart) has consolidated its recent gains right around the critical 1850 resistance area after having spiked to a record high near 1859 earlier in the week. This high broke out slightly above the previous all-time high that was recently set in mid-January. The US equity index saw a sharp rally within the past three weeks that has more than regained all of the losses that occurred in the 6% decline of the two weeks prior to the rebound rally. That decline brought the index down to a key support level around 1735. While the dip fell below a key uptrend line extending back to November 2012, the subsequent rally has placed the S&P 500 on track potentially to continue the long-term bullish trend.

Currently situated well above both its 200-day and 50-day moving averages, the index continues to show short-term strength. Continued upside momentum could target further uncharted territory around the 1900 level. Likely, however, the index will soon be due for another significant decline. While the 6% drop in late January was substantial, it failed to decline enough to classify as a true correction. The one-directional move of the last three weeks could soon dip once again, with major downside support continuing to reside around the noted 1735 level.

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