S&P 500 Trendlines to Watch as Bulls Remain in Control

Core Viewpoint - The market sentiment has shifted in favor of bulls, with the S&P 500 Index (SPX) showing a strong upward trend, particularly following the mid-November low, despite potential resistance levels approaching [1][6]. Market Trends - The SPX has maintained an upward trajectory, with a "V" rally continuing from key lows in September and October, and is currently trading at 6,870.40 [1]. - The lower boundary of the bull channel, which has been in place from June to mid-November, is acting as resistance, currently positioned at 6,893 and expected to rise to 6,925 by the end of the week [1]. Key Resistance and Support Levels - Immediate resistance levels to watch are around 6,890, which corresponds to the October closing high, and the psychological level of 7,000, which is significant due to its association with J.P. Morgan's quarterly collar trade [4][5]. - The 30-day and 50-day moving averages are identified as potential support levels, with the 6,550 level marking previous lows in September, October, and November [7]. Sentiment Indicators - The sentiment is bullish, supported by a high level of short interest in SPX components and a favorable buy (to open) put/call volume ratio, indicating increased optimism among equity option traders [8]. - A notable increase in short interest was observed in the first half of November, with many shorts currently underwater, suggesting potential for short covering [6][8]. Active Investment Managers - Active investment managers are fully invested, which poses a risk to the anticipated market breakout if they decide to sell, as was the case in late October when they reduced net long positions significantly [9]. Overall Market Control - Despite potential risks, bulls remain in control of the market, with more cash available for investment compared to late October, indicating a favorable environment for continued upward movement unless the 6,550 level is breached [10].