The S&P made a new closing high yesterday of 1593.61. Will we hit 1600 soon?
S&P500 three-month chart:
While it could be argued that 1600 is just a number like any other, it's not really as big round numbers are attractive to people psychologically. A lot of people will say things like "I will buy/sell when the price hits 1600" but are less likely to say "I will buy sell when the price hits 1598".
You see this too in sports betting where the market will 'congregate' around traditional prices like 5/4, 6/4 or 2/1 or whatever.
So the 1600 price is interesting - we can assume a lot of people that have gone short on the S&P may have stops placed just above 1600. Similarly, some traders will be waiting to buy once they get confirmation that the price has gone through the barrier. People have lots of different reasons to buy and sell around these prices so very often, we will see resistance before we get a breakthrough. Of course, the S&P is an index of 500 companies and isn't a stock in itself - but many funds buy collectively into those stocks at a ratio so the overall price of the index does have meaning.
At the moment, I'm just jobbing along on this market and buying the gaps (buying the index if the morning price is lower than last night's closing price), taking profit when the gap closes.
Is this the week we smash through or is there a wall of resistance in store?
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