The S+P is now up 13% from the December bottom, and has entered into what will likely become the next trading range -- the area between the 50 and 200 MAs, which also corresponds to the Oct-Nov trading zone.
So that will be the area to watch for the S+P -- 2625-2741 (50 and 200 MAs) and more broadly 2600-2800 (Oct-Nov trading range).
Since the S+P is only barely into that range and is near term overbought, it might first pull back under that range temporarily (and under the 50 MA) before settling into the range. But that will likely be the new trading range for the next few months.
I'm not a shorter, and think we'll likely see a sideways trading range, but for those who are considering going short, the areas to watch are 2600 and then key support at 2350. 2600 will be more important once the S+P has settled into the new trading range for a while. If it's been in the range for several weeks and then breaks down under 2600, the shorters might step in for a short term swing trade. If the S+P breaks below 2350, that would confirm a new downtrend and the operative strategy will be to stay out of the market, or be short, and sell/short the rallies.
So that would be the strategy (according to 'the rules') -
A break under 2600 -- near term short swing trade
A break under 2350 -- stay out of the market or be short, and sell/short the rallies.
