- Technical Commentary -

September 18, 2009 (FinancialWire) (By Frank Kollar) — While the S&P 500 Index (SPX), and its tracking ETF the S&P Deposit Receipts (NYSE: SPY) seem to be in a never-ending rally, there may be trouble just ahead.

Looking at the SPY; the 50% retracement of the entire bear market decline from the October 11, 2007 highs at $157.52 to the March 6, 2009 lows at $67.10 are just above current levels.

$112.31 marks the 50% retracement and this is very likely to be a huge resistance level if and when the stock market gets there. This is about 4.7% higher than Thursday’s September 17 closing price.

Considering current momentum, there is every chance the SPYDRs will get there in coming weeks. When they do, watch for a bearish reversal pattern to mark the beginning of an overdue round of profit-taking.

On the positive side, a solid close above $112.31 would likely lead to a continued rally to the next resistance level, the 61.8% retracement all the way at $122.98.

If we do move lower, initial strong support should be found around SPX 848 which is the 50-day moving average for this big cap index (for the SPY the 50-day moving is at about $85.00).

(The http://www.fibtimer.com ETF Strategy has a position in the S&P 500 SPYDRs.)

[Go to http://www.financialwire.net/?s=frank+kollar to see more commentaries by Frank Kollar.]

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