The Flexible 1120 Stretching it to the Limit

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I know it can become repetitive to keep discussing the 1120 level on the S&P 500, but the fact of the matter is that it remains a crucial reference point. This morning marked the tenth separate time since early-August that the 1120 area has been tested and held by the bulls. Generally speaking, the more a reference point is tested, the more it eventually is likely to give way to a breakout or breakdown. In this case, we know that the bulls have stepped up and defended it despite the appearance that bears were well on their way to a major leg lower.

Given how random the intraday moves have been, especially today, there is not much to do for a swing trader like myself but closely watch the action for some type of resolution. We have been in a sloppy range for two months now, but eventually that will give way. The only issue is whether 1120 is truly as flexible as advertised, or whether it has been stretched to the limit and ready to break.

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