Bounce and SPY Resistance Point

As mentioned 2 days ago, the market looked poised for a bounce from its lows of S&P 500 at 1200.  With a 3.5% rally since (admittedly only 2 days), the question that starts being asked is where will the market stop?

Below is the S&P 8 month chart.  As you can tell, there's some clear resistance points forming.  In end of Oct, the S&P hit its 200 day moving average and promptly dropped 10%.  It then retested the 200 day moving average at end of Nov and again promptly fell, this time almost 5%.  Its now try #3 at ~1260, only a measly 1.4% away.

In addition, the long term trend line is clearly forming a wedge shape as the downward trend line and upward trend line are moving together, again at the resistance of ~1255-1260.  The next week or so is going to be extremely interesting as the market will now test whether it can break up or break down against the hardened and tested resistance.

Load up on your motion sickness pills as there's potentially a roller coaster ahead.