On 2/4/10 the market reached a low of 1059.25. On 2/5/10 the market reached a low of 1040.75. The jobs report released on 2/5/10 was a combination of positive and negative information, thus making the report complicated to understand and causing increased volatility on Friday.
The equity and forex markets have recently taken a stronger focus on the increased sovereign debt issues of Portugal, Ireland, Italy, Greece and Spain (P.I.I.G.S.), especially Greece and the potential for contagion to other European countries and emerging markets. The global capital markets have reacted by selling stocks and buying the U.S. dollar.
The 1059 to 1040 area is a major support area. The market could move sideways in this area if there is no further negative news. Even with some positive news, the market will probably be at least initially cautious of taking the next leg upward.
If the market doesn’t hold the recent lows, then the next support area is 1039 to 1030. The next major support level is 960 to 945. 1000 in the S&P is a psychological number, if the market falls below 1000 it would probably be enough of a psychological shock to shake more of the longs out of the market and a strong probability of building the next base assuming we don’t see a double dipping recession.
If the market should begin to move higher, the next resistance level is 1075 to 1078.