S&P 500 makes a bullish break

THE SPX (S&P 500) made a relatively convincing bullish break above the bearish ascending wedge identified in July, helped along by plummeting bond yields in recent weeks. Declining bond yields have been bullish for the S&P500, given its increasing weightage towards technology and risk-on equity plays. As bond yields decline, technology stocks with higher valuations become increasingly attractive, thereby typically attracting fresh investment interest.

In any case, the bullish break above the previously identified rising wedge was executed at around the 4,265 price level and was followed by a retest of this level as support around two weeks later.

The SPX however endured the re-test, rebounding strongly onto a higher level to test the resistance at 4,427. Thus, the previous area of resistance at 4,265 has likely flipped into a strong support level, with a second, weaker support level at 4,385 which saw a minor breakout in end July.