The most significant event on the Twitter stream this week is renewed calls for the old highs on the S&P 500 Index (SPX) near 2135. Everyone is now waiting to see if that level can be broken to the upside. If it can, then I suspect we’ll see a huge rally as the bears cover and are forced to chase the market higher. Below the market there is support at 2080 and 2050. There are very few people tweeting the 200 day moving average, which indicates an upside bias over a test of the 200 dma. Calls for 1800 and 1810 dried up this week too. Just one more indication that people are looking up with hope rather than down with fear. A break below 2050 will likely see calls near 2020 (200 dma). If those levels are broken then I’d expect a swift move lower.

Another sign that the move will likely be swift comes from 7 day momentum and sentiment for SPX. It coiled in a tight range for seven weeks then broke slightly lower, recovered, and broke slightly higher. It is now turning back down. It looks like tremors before the big one to me. The question is, which direction?

Breadth wasn’t encouraging over the past few weeks. The market rallied and the number of bullish stocks fell. This indicates profit taking in the most bullish stocks rather than looking for other bullish opportunities. Bulls want to see this number climb if the market rallies.

Conclusion

Market participants are leaving fear behind and starting to hope for new all time highs, but the tremors in 7 day sentiment indicate a swift move lower is also possible. Watch 2050 on the downside and 2135 above for a break. If those levels are confirmed by sentiment and breadth I’ll be expecting a swift move in the same direction.