S&P500 Index 4H Chart 10/15/2012 10:20AM EDT

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Trendline and Double top: The S&P 500 has been falling since falling from a October high of 1471. The 4H chart shows the market held under a falling trendline, pushing below a previous support pivot at 1430.60. The break of this support also completes a double top. We are seeing some support at 1420 as the 4H chart shows a bullish divergence with the RSI. As we get into the 10/15 US trading session, this oversold condition has already been resolved. The market is now faced with the channel resistance.

Rising trendline: When the S&P 500 high 1420 and bounced up during the 10/15 European session it was respecting a rising trendline that goes back to May 2012, as seen in the daily chart. This is a much more important trendline than the one seen in the 4H chart.

Breakout scenarios: The break above the trendline holds off the double top, scenario, and a break above 1450 could be a sign of bullish continuation. Looking at the daily RSI, it would be holding above 40, and show bullish momentum intact.

Only a break below 1420, clearing the rising trendline and validating the double top is a sign of topping, or a significant correction in the short to medium term.

Bearish target: Looking at the daily chart, we see that at 1394-1395, we have a previous consolidation support and the 38.2% retracement. This coul be a short-term target for a break of the noted support factors.

S&P500 Index Daily Chart 10/15/2012 10:26AM EDT

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