Below looks at the Wilshire 5000, one of the world's broadest stock indices, which is undergoing a key “strength test” right now.
Line (1) became key resistance for months and months in 2015.
A couple of months ago the Wilshire broke above key resistance, which was a positive sign of strength. Recent softness has taken the index to test old resistance as new support at (2).
Global risk-on trade wants and needs support to hold at (2). If it does, it would send a positive message to stocks in the states and, potentially, globally.
If the Wilshire is to remain strong, support needs to hold at (2).