SPX right now is slightly oversold having declined the past few days. STOCH and RSI are representing oversold conditions.
SPX is sitting strong support, it is slightly below its 50EMA, sitting on an uptrend from early September and 1022 is the 200MA on the monthly chart. This area should provide a bounce to higher levels. The the first strong resistance level is the 1045 area, it will be important to see how the market reacts at this level. SPX will be testing overhead resistance at this level and the 20EMA which was perviously support. This level may be hard for the bulls to break.
The 1050-1050 level is the strongest resistance, this is now the newly established down trendline from the top at 1070. This area is also resistance on the weekly and monthly. On the weekly chart is its the 89 EMA, on the monthly chart it is the 20EMA. When the market broke this levels last time, it made new highs and after breaking it this week the market sold off.
The real key levels to watch are:
Resistance- 1055
Support- 1022
Another reason for the possible bounce is the sentiment is very bearish right now. The CPC is very high and bearish. This has a tendency to the bullish.
Another reason I would expect the bounce is that to many people are expecting a "correction". The market will have to suck in some more people to the long side. All day on Friday, CNBC just kept babbling on about a "correction". So a bounce should happen and then they can babble about "new leg up".
Earnings season starts this week and this could be the catalyst for some selling or maybe buying. Friday's job numbers indicated an economy that might not be rebounding, if earnings come in lower then expected it could signal that the economy is doing even worse. But good earnings should be received well by the market and may boost the market.
