- Commentary -

January 8, 2010 (FinancialWire) (By Frank Kollar) — Both the S&P 500 Index (SPX) and its tracking ETF the S&P Deposit Receipts (NYSE: SPY) are at new rally highs, both have surpassed important resistance levels, both have higher highs ahead.

A few weeks ago we wrote “What Happened to the Rally?” Apparently it was alive and well, but waiting for the year end holiday period to kick start it back into action.

The 50% retracement of the entire 2008-2009 bear market decline was at SPX 1119.31 and for the SPY at 112.31. These resistance levels held the advance in check from mid-November until finally they were surpassed during the two week holiday period.

In our chart studies we watch support and resistance levels closely. When broken in either direction, the markets tend to move to the next support or resistance level.

In this case, the SPX should continue higher to the 61.8% retracement level at 1226.10 which is 7.4% higher than Thursday’s January 7 close. The SPY should make it to $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).

(Disclaimer: 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.]

The FirstAlert(tm) Economics Calendar lists Employment Report for December (8:30 a.m.), Wholesale Trade for November (10 a.m.), Consumer Credit for November (3 p.m.).

FirstAlert(tm) Website of the Day: http://www.elvis.com/

Quote of the Day: “There are no exceptions to the rule that everybody likes to be an exception to the rule.” Charles Osgood

Today is: National English Toffee Day.

Happy Birthday: José Ferrer, Larry Storch, Soupy Sales, Charles Osgood, Elvis Presley, Jesse Presley, Bob Eubanks, Graham Chapman, Stephen Hawking, Yvette Mimieux, Terry Brooks, Robby Krieger, David Bowie, Jason Giambi.

Today in History: Ethelred of Wessex defeated a Danish invasion army in 871 at the Battle of Ashdown. Louis XII of France married Anne of Brittany in 1499. Bonnie Prince Charlie occupied Stirling in 1746. George Washington delivered the first State of the Union Address address in New York City in 1790. Crazy Horse and his warriors fought their last battle with the United States Cavalry (Montana) in 1877. A landslide in Haverstraw, New York, killed 20 people in 1906 due to the excavation of clay along the Hudson River. Fourteen-year-old Bobby Fischer in 1958 won the United States Chess Championship. Ella Grasso becomes governor of Connecticut in 1975, becoming the first woman to serve as a governor in the United States who did not succeed her husband. RMS Queen Mary 2, the largest passenger ship ever built, was christened in 2004 by her namesake’s granddaughter, Queen Elizabeth II.

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