There are obviously many resistances ahead for SPX(and the other 2 major indexes) if it is to successfully rally out of this rut.
As Oil price recedes, focus may turn to Fed's decision on rate hiking... it is widely believed that Fed will increase overnight rates, it is a question of when.
With the failure of IndyMac (bank), some fear of the unkown in the financial sector, maybe perceived as being removed. Just like BSC's debacle provided temporary relieve allowing Mar's rally to take place, even though everyone is rather aware that the subprime issues are yet resolved. So, it is a perception, a mere perception that can cause Shorts to cover and Longs to be optimistic enough to re-enter the market.
SPX Hourly, as mentioned, have seen whipsaw actions for more than 1 week now. This clearly indicates uneasiness on part of Shorts to stay bearish for too extended periods. If Shorts leave, and no new Shorts enter, then market cannot go much further downwards.
It is not wise to open new Shorts at this time. Neither is it too wise to take too heavy a bet on Bullish positions as well. At least, wait for some retracements, close to or at the supports before considering initiating new Longs.
As for Long positions, Call Spreads are probably the best strategy, since, price cannot be expected to rise through the roof and it provides adequate downside protection in days of corrections.
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