What do you do when you run out of support levels? Apparently, you bounce and bounce hard.
The Dow Jones Industrial Average is set to open 368 points higher as this is being written, the NASDAQ Composite could open up156 points, and the S&P 500 Index about 41 points above its close on Thursday.
We wrote yesterday that the action on the S&P chart this week pierced through a number of support lines, and 50 day and 200 day moving average support. There was little in the way of further technical support visible on the chart. The strong move in the futures overnight could move the indices back up to where those former levels of support will come back into play, now as resistance. Former support becomes current resistance.
Taking a look at the S&P 500 daily chart, its implied 41 point higher open will take it back above its 200 day moving average. The average then becomes support.
As far as upside resistance, there is a strong band of horizontal resistance in the 2790 to 2800 area. It was resistance in March and June and support when broken in July. It could be a formidable barrier going forward.