With the S&P 500 approaching its 3000 resistance level (round # resistance), some bearish investors and traders think that the stock market will make a short-medium term top here.
Meanwhile, the NASDAQ is at its 8000 resistance level right now (round # resistance).
I don’t think the stock market will care about these round # resistances. The data and facts prove that “round # resistances” aren’t very useful in the U.S. stock market. Round # levels are just like any other level in the stock market. There’s nothing “special” about them that makes them useful resistances.
*Conventional technical analysis states that round # levels are “psychological resistances”. And once again, conventional technical analysis is wrong.
Here’s what happened next to the S&P 500 when it reached a round # resistance (1k, 2k)
Here’s a closer look at what happened next to the S&P when it reached a round # resistance.
Here’s what happened next to the NASDAQ when it reached a round # resistance (1k, 2k, 3k, 4k, 5k, 6k, 7k)
Here’s a closer look at what happened next to the NASDAQ when it reached a round # resistance.
As you can see, the stock market doesn’t always make a short-medium term pullback when it reaches a round # resistance. Betting that the market will fall just because it’s at a round # resistance is no better than a 50-50 guess.
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