Next, let's look at another weekly chart of the S&P 500. Notice that the 23 weekly RSI seems to be a good bull and bear indicator. In addition, the 65 weekly Exponential Moving Average (EMA) at 1244 also acts as support indicating is it holds this level is a good place to buy. Best to monitor activity for now.

Now take a look at the daily S&P 500. In May it broke down through an up channel that had been in place since November of 2005. Now the May 8, 2006 high of 1327 acts as resistance. Presently we are seeing a rising wedge which is considered a negative. A break below the lower trend of the wedge is a sign of further weaknesses. Should we see a break through the upper part of the wedge then resistance at 1327 is the next level to watch. Also, note the 50 moving average is close to crossing up through the 200 moving average which is a positive. Looks like the positive divergence on the MACD is breaking down indicating weakness in the near future. Buying near support levels are still the way to go. However, we need to be ready to sell quickly when these resistance levels hold. Keep our stops in place.

Based on this brief review of the S&P 500 charts, I will look for buy stocks that are at or near support levels with initial targets that correspond to the 1291 S&P 500 resistance levels. I will also begin to look for short opportunities including the Rydex inverse funds that offer 2 times down side leverage and various ETFs such as QID, should these support levels fail. Now is the time to be very careful with the turmoil in the Middle East and the economy weakening.