There are times in the market when one simply needs to wait for more evidence in short-term market price behavior in order to develop an educated view as to the next likely major move -- either to the upside or the downside. Unfortunately, post last week's surprise rally, this has evolved to be one of those times.

On the chart above, we have drawn a variety of key levels to now watch -- lines in the sand so to speak as the tanks still rumble through Iraq. First, as support under the market, there are the two important Fibonocci areas of potential support that we have emphasized in red near 846 and 871. Only under 846 would it become likely that an immediate move toward 737 would be transpiring.

Meanwhile, above the market, we see prices currently trying to eat away at the 200-day moving average. A clean vault above that average, and the probability would swing towards a top forming between 954-974 on the S&P 500 -- albeit with a substantial decline post that romp still then likely.

Which path will it be? Our gut is increasingly ready for the latter, but this is not (nor has it been for some time) a high probability prognostication either way. All we do know is that should 972-974 be reached on some sort of Baghdad victory euphoria, such a level will represent a compelling short selling opportunity. But some patience is obviously required first. We need to listen to the market itself for a bit, and try not to over-anticipate.

Non-subscribers are invited to access our March 23rd article, "Dealing with Irrationality & The New Age of Aquarius: Malkiel Out; Sornette In," together with other past articles, by signing up for a quarterly Sandspring.com subscription below.

Disclosure Statement

Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. The opinions expressed are not intended as specific investment advice, and simply represent our personal views offered here under our right of free speech. Sand Spring Advisors is a NFA registered CTA/CPO, but is not a Registered Investment Advisor. We do not directly trade any client funds. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.