S&P 500: A Tale of Two Charts

The S&P 500 is sitting at a critical juncture, right at its 200 DMA. After a near 15% rally from the Christmas Eve lows, it now has a lot to prove to keep this run going. 

If you're bearish, then this is your S&P 500 chart to keep an eye on. A sell off from current levels, representing a clear rejection form the upper band of this downward trending channel, would point to a retest of the Christmas Eve lows of ~2,347, or even a plunge to lower lows. 

If you're bullish, you should keep an eye on the chart below. A break out above the downward sloping trend line is bullish, and today's test and successful bounce off of that trend line today should instill confidence in bulls. 

So which chart will play out? The declining volume on this rally, and the high number of hits on the lower band of the down-trending channel, lead me to favor the bearish chart. A 3%-5% sell off seems unavoidable, which would retest the 50 DMA. A drop below the 50 DMA would suggest a retest of the Christmas Eve lows.

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