The major market indices are back to where they were before the alarming December decline and the euphoric December rally.
It is important to understand what this means from a supply and demand perspective.
Those traders who held long positions through this four month roller coaster ride may be very happy to have recovered their losses. Many will be anxious to sell their long positions after now being made whole.
On the other hand, there are those that panicked and sold into the decline. These same traders likely missed the sharp bounce and have seen the market rally back up, past the levels where they sold on the way down. They want to make up those losses and don’t want to miss out on a potential second phase of the December rally. They are buyers into this test.
So as the give-and-take dynamic of the market takes place it is important to know the location of those key levels of support and resistance around which it will play out.
Here are several annotated weekly index charts: