The S&P 500 is still in bear mode after its fall from a head and shoulders top in August. The rally back the the neckline was classic charting. The oscillations in narrowing ranges since then also fit within what is becoming a channel or flag. So there are some clearly defined levels to watch now. ON the downside the uptrend line from the 1073 low in early October.There is also the support line linking that August low with a slightly lower low back in July 2010.
On he upside there are several important levels of interest. A signal another upleg is coming would start with a break above the down-sloping line linking the right shoulder in July with the recent test of the neckline. The next resistance level to overcome would be the right shoulder and head themselves.
The most likely scenario still seems to me to be we will test the 2009 lows.
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