Extreme Resistance

Below is a chart courtesy of "Afraid to Trade" that shows the Fibonacci retracements:


The S&P is demonstrating sideways behavior presently as it struggles against two important resistance levels.
Firstly, it has breached the 200 day MA on a weekly basis that acts as the first level of resistance.
Secondly, it is struggling with the second level, the 61.8% Fib retracement of 1229 points. S&P momentum is falling, a sell signal has been triggered, and the index appears to be headed back down once more.

Thirdly, it may soon fall back below the weekly 200 day MA level of 1190.  This would be more evidence for the bears.
If the S&P manages to break through the 1229 level, it would be enough to convince me that this may be a new bull market.
However, many indicators point toward a downward direction, making this one of the most vicious bear markets in many years.
Some indicators to watch follow my comments.

From Bloomberg:

Oil Declines A Third Day

Oil declined for a third day to trade at a two-week low on speculation Europe’s deepening debt crisis and government steps to cool Asia’s economic growth will reduce demand for commodities.

Futures fell after the Bank of Korea raised interest rates for the second time this year and the China Securities Journal said the Chinese government will take further steps to control price increases, while European ministers gathered in Brussels to discuss aid to Ireland’s banks. An Energy Department report tomorrow may still show U.S. crude stockpiles fell last week.

European debt problems have re-emerged, scaring away investors from risky assets such as oil,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark.

Copper Drops on Concern China May Take More Steps

Copper fell in New York and London on concern that China, the world’s biggest consumer of the metal, may take further steps to cool economic growth, damping demand for commodities.

China is under “pressure” from capital inflows, central- bank Governor Zhou Xiaochuan said as a state newspaper reported that price controls may be imposed to cool the fastest inflation in two years. The country’s benchmark money-market rate yesterday rose to a one-week high. Chinese stocks fell today, driving the benchmark index to a one-month low.

Copper is down again this morning after Chinese equities took another pounding as the potential for Chinese monetary- policy tightening continued to weigh on investors and conspired to drag prices lower,” Alex Heath, head of industrial-metals trading at Royal Bank of Canada Europe Ltd. in London, said in a report.

Copper for delivery in March dropped 7.45 cents, or 1.9 percent, to $3.85 a pound at 8:16 a.m. on the Comex in New York.

Dollar Rises on Debt Concern

Treasuries slid, sending 30-year yields to the highest level since May, amid increased criticism of the Federal Reserve’s plan to stimulate growth and concern that a swelling U.S. deficit will lead to higher borrowing costs. U.S. stocks erased gains and the dollar rallied.

The 30-year Treasury yield climbed 13 basis points to 4.42 percent. The Standard & Poor’s 500 Index slipped 0.1 percent to 1,197.75, wiping out a gain of as much as 0.7 percent. The Dollar Index jumped to its highest level since Sept. 30.