These S&P 500 Levels Will Tell You the Rally's Over

NEW YORK (TheStreet) -- People who trade the stock market based on news must have a tough time. For weeks there have been pronouncements about how the market was about to crash. Greece has been cited as a reason to fear the market. So many people have said that there was no possibility stocks could move higher.

And, all this time, the answer at ElliottWave Trader has "just let support break" or "just let a bullish pattern break" and only then it will be time to join the bear camp.

So, first, the S&P 500 index, tracked by the SPDR S&P 500 ETF (SPY), tested the 2,072 support level -- twice. And each time, the market held and rallied. Wednesday, the setup was such that the S&P 500 should not break 2082 and that the market was set up to break out of the downtrend channel it has been creating of late. And, of course, Thursday the market obliged with a breakout.

Based upon the Elliott Wave/Fibonacci Pinball methodology, the market appears relatively easy to trade. It's in a pattern setup that points toward the 2150-2160 region on the S&P 500. And, as support was moved up from 2072 to 2082 Thursday, one can now move support up to the 2105 level. This chart shows the wave counts on the S&P 500.

As long as the S&P 500 does not break down below 2105 on any pullback over the next several trading days, then the market should be looking next to 2141. Ideally, it will remain over the 2115 level.

If the index breaks below 2105, that will signal that it has topped and likely will retest lower support and may not hold that support.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Investing

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

Did Trump Just Torpedo the Stock Market Again?

Did Trump Just Torpedo the Stock Market Again?

Venture Capital Funding Surges 49% as Tech Innovation Piques Investor Interest

Venture Capital Funding Surges 49% as Tech Innovation Piques Investor Interest

10 Questions for PayPal Ahead of Its Big Investor Day

10 Questions for PayPal Ahead of Its Big Investor Day

Lowe's Taps Home Depot Veteran As New CEO

Lowe's Taps Home Depot Veteran As New CEO