From the recent price actions, one can detect there are traders chasing after rising equity prices. Although there are no signs of a market top, but the SP500 is approaching an important inflection point near the 1230-1250 level.
The following SP500 price charts illustrate how the 1230-1250 inflection level was derived. In the first SP500 weekly price chart, it illustrates how the inverted head & shoulder pattern formed between 10/08 - 7/09 gave a measured move of approximate 1250. The second SP500 weekly price chart shows the 61.8% Fib retracement between the 2007 high to 2009 low place it at 1228.74. The significance of these levels is purely technical and these levels have the potential to be resistance and could potentially be reversal level. If the SP500 can hold above the 61.8% Fib retracement level, there is a high probability that it will retrace back to the 100% level, which will place the SP500 back to the high of 2007.
I will not be surprise to see the SP500 reach the 1250 level before it consolidates. The reason is 1250 level have been mentioned by different talking heads as the high for the SP500 in 2010 or the SP500 will end 2010 at 1250. Since the 1230-1250 is in sight for the SP500 to hit, probability favor it will be hit.
