Can the S&P Break Through Resistance?

Last week we pointed out that the S&P 500 had a potential failed negative at the 200-day moving average. What appeared to most technicians as a head & shoulders pattern, never fully materialized and the S&P was able to bounce off of support and start to retest the prior highs. The S&P had no resistance at the July 1 high of 932. Positive earnings last week from the likes of Intel, IBM, et al assured that 932 would be a paper wall. Now comes the tough part. The S&P is approaching some serious overhead supply in the 950 area with the June 11 high of 956 directly ahead. Another big week of earnings are in front of us with Apple (AAPL), Freeport-McMoRan (FCX), Coca-Cola (KO), and Caterpillar (CAT) likely to set the tone early in the week. Right now the S&P stands around 950. Nice round number. There is sometimes resistance at round numbers. Goldman Sachs this morning raised their year-end target on the S&P from 940 to 1060. Will they be right or are they just talking their book? We will soon see but if the market can penetrate this 956 high and create some distance, then I don't think the next nice round number of 1000 will be too far off in the future. spx720

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