Market Update: Rally off lows but resistance nearby

The market (S&P 500) has rallied off its June 24th lows, rising from 1555 to pushing over near-term resistance of 1600 in overnight futures:

Source: Finviz.com

Note in the hourly chart what looks to be an inverse head-and-shoulders pattern, a bullish sign, but again it's within a very compressed time frame.

Referring to the daily chart, overhead resistance is more apparent:

Source: Stockcharts.com

The S&P 500 Index has staged a reflex-rally from the abrupt declines suffered over the last few days -- a common price reaction. The 50-day moving average has served as support during the YTD market advance and with the June 19th sell-off, the rising trend (as represented by the 50-day MA) was broken. This recent rally has put the S&P 500 within about five points of the 50-day MA of 1620; all eyes will be watching to see if the Index can meaningfully get through this level. Also note the recent rally has served to fall just short of "closing the gap" as the June 19th decline exhibits a gap at around 1625, another level of resistance.

Bottom line: in the short-term, it's not surprising to see this market rally off oversold levels, a fairly typical TA occurrence. However, as discussed, the 1620-1625 range poses as significant resistance and it will be interesting to see if the Index can successfully break through this price area (and mind you, not just poke through, but get well beyond 1625). If not and the Index rolls over, next stop could be 1550. Stay tuned.