I wanted to do a quick update on the current support/inflection level on the S&P 500 which could set the stage for the rest of the trading week.
Let's look at the Daily "EMA Confluence" level along with the hourly intraday rising trendline pattern.
In simplest terms, the key level we're monitoring is the 1,410 level which reflects the confluence (crossing) of the 20 and 50 day exponential moving averages (1,413 and 1,412 respectively).
The last time we had a similar pattern of price moving INTO the 20/50 day EMA confluence was early November where price touched this level two times and reversed lower, continuing the downtrend that triggered on the break of the rising 50d EMA.
[Related -SanDisk Corporation (SNDK) Q1 Earnings Preview: Heads or Tails on Pop or Drop]
We'll be watching for a possible continuation of the uptrend that similarly triggered on the move above the 50d EMA in late November, but we note that the recent price action ABOVE these levels has been relatively weak and divergent.
We can also see that 1,410 is a Price Polarity Level, meaning price has recently respected this index level as both resistance (August 2012) and support (October 2012).
Bullish short-term strategies will be favored above this level while bearish ‘breakdown' strategies will be favored under it (and especially under 1,400).
[Related -Estee Lauder Companies Inc (EL): Goldman Sachs is Convicted EL Will Make Your Portfolio Prettier]
A glance at the hourly chart shows a price trendline intersecting this level as well:
Assessing Market Structure, we see a short-term uptrend as evidenced by the progression of higher highs and higher lows along with a bullish EMA Orientation (the 20 remained above the 50 EMA).
At the moment, we see a similar hourly EMA support confluence into 1,420 but the most important factor is of course the possible continuation of the inflection up (starting this morning) off the 1,410 rising trendline and Daily EMA confluence level.
We'll place our intraday strategies within this context and be aware to any sudden changes such as a sudden reversal break back under 1,420 and of course any bearish activity under 1,410 which would trigger bearish defensive activities.
Continue monitoring price action relative to these levels and adjust accordingly should the need arise.