So far the S&P 500 has held support just above the mid 1390's which is a key longer term support zone that coincides with its Linear Regression Line (blue), upward trend line (black) from the October 2011 low and 38.2% Retrace from 1267 to 1475.
In the weeks ahead how the S&P 500 responds to this key support level will give us an idea of how the market will act as we move into 2013. If the S&P 500 can hold support in the mid 1390's then that still leaves the possibility of one more slightly higher high. This would take the shape of a Wedge type pattern with a final target near 1500.
Meanwhile if the S&P 500 breaks solidly below the mid 1390's support area then I would expect an eventual drop back to the longer term trend line which coincides with the low made in June in the mid 1260's (green line).
Finally with the election only a few days away whoever the next President is will have to deal with the Debt Ceiling before the end of the year. As of October 31st the current Debt stands at 16.261 Trillion Dollars. Remember the Debt Ceiling is at 16.394 Trillion so we are only 133 Billion away from it. Considering the pace at which Debt is being accumulated the Debt Ceiling will probably be reached by the end of the month.
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