Market Analysis: SPX Rally Faces Sustainability Test

Market Summary The S&P 500 (SPX) executed a powerful rally from the 5830 support level, climbing to 5996 by mid-afternoon trading. The move validated Monday's bullish hammer candle at the support of a two-month megaphone pattern, resulting in a textbook short squeeze after a 255-point selloff from last week's highs.

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The rally's technical progression followed predicted resistance levels precisely, moving through 5893, 5918, and reaching 5996, supported by CPI data. The movement was particularly notable as it demonstrated the market's reaction to a failed breakdown at major support, a classic catalyst for short squeezes.

Technical Levels

• Support: 5845-50

• Key Resistance Points:

  • 5934-36

  • 5965

  • 5996/6004-08

Price Action Analysis

1. Pattern Recognition

   • Megaphone support at 5830

   • Bullish hammer candle formation

   • Back-test setup at 5845-50

2. Trading Dynamics

   • Short squeeze trigger

   • CPI data catalyst

   • Volume confirmation

Looking Ahead

• Sustainability of rally key focus

• Monitor 5845-50 support

• Watch for consolidation patterns

Continue monitoring for signs of rally sustainability and potential resistance levels.