In focus: Bears in hibernation

By Lawrence G. McMillan

The stock market, as measured by the Standard & Poor’s 500 Index and other major indexes, continues to plow forward at a relatively slow, steady pace.

Since the S&P 500 SPX +0.07%   broke out over resistance and the 200-day moving average on the first trading day of the year — Jan. 3rd — the market has had only two minor down days. One day SPX was down 4 and another down 6. Every other day has been up. There hasn’t been any really negative news, but there hasn’t been that much positive news, either. It’s almost as if the bears are in hibernation. Where are the sellers?

Technically there is good support in the 1,260-1,270 area, from the 200-day moving average up to the afore-mentioned breakout point. In addition, the bullish trend line that defines this current uptrend is at about 1,240 right now. We do not expect any corrections to carry that far while our intermediate-term indicators are positive, but should 1,240 be violated, it would be quite negative. Meanwhile, SPX is trading above the October highs and at levels last seen in July. The next resistance level is at 1,345-1,350 — the July highs.

To read the full article, subscribe to The Market Watch Options Trader.