Chart of the S&P 500 (SPX) – S&P 500 Hits New 5-Month High but Faces Technical Resistance – Source: TheTechnicals.com and TradingView

The S&P 500 (SPX) hit a new 5-month intraday high around 2821 on Wednesday before paring some of its gains and pulling back below key technical resistance around 2816. Driving the stock market higher on the S&P 500’s fourth consecutive up-day were tech stocks led by Nvidia (NVDA), which surged 3.75% on Wednesday.

Resistance Revisited

Wednesday marked the fifth time that the S&P 500 has tested the major 2816 resistance area since mid-October. This year, the first two tests occurred in late February and early March. On both of those occasions, the S&P 500 promptly turned back to the downside at resistance. On Wednesday, the index was able to squeeze out a new intraday high, but was unable to sustain a confirmed breakout and close above that critical 2816 level.

From a technical analysis perspective, the more times a support or resistance level is tested and holds, the stronger that level becomes. The rest of this week will help decide whether this important technical level will be breached or respected. Any upside breakout will validate the market recovery from the late-December lows and increase the likelihood of a full recovery up to September’s 2940-area record high, and potentially above. Any failure to breakout, however, could send the S&P 500 back down towards its 200-day moving average once again.