SPY closed up a big 7% this week after the last two weeks SPY was down on selling pressure. SPY's bounced this week closed the gap left from the Thanksgiving week drop and made further headway breaking above the 118 and 121 resistance. These areas should now act as support especially the 118 level since as the weeks progress this horizontal support level will also be at the uptrend line.
SPY finally meet resistance at its short-term downtrend that has started since the decline in October. Each time SPY has hit trendline it has been rejected, the downtrend is also at the 126.76 resistance level. The 125-127 area should be strong resistance and if the bulls want to break through it, they might need to hit it a few times.
Overall this week was very bullish with a 8% gain in the market, killing many bears with it. The last few weeks when SPY reached these levels it was turned back. Friday, we saw this rejection at these levels on the daily chart as the market hit the 126.50 area and was sent back down. It appears the market isn't ready to test these levels yet.
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