Wednesday, May 27, 2015

Higher Highs and Higher Lows:



The Up-Trend For The S&P 500 Is Still Intact.

  • Technically, long-term trend line support for the S&P 500 is at approx. 1970-80.
  • Although yesterday registered a significant drop on higher than average volume, until enough selling interest enters the market to push it through that level, the up-trend will continue.
  • Trading volume is a concern, as the up-days continue to reveal lower than average volume and the down-days have higher than average volume, however there has not been enough price movement or momentum in either direction to take the S&P 500 out of its short-term range:


  • Volatility jumped yesterday, but in general has been well below its historic averages and certainly significantly lower than it was earlier in the year:

What comes next?
  • We continue to believe that stocks are expensive:


  • However until a sustained break-out from the current trading range in (either direction) occurs, the short-term looks like it will be more of the same, range-bound trading.
  • If enough buying emerges to make new highs above 2135 and the market is able to sustain those, a move to 2150 will be likely.
  • If selling enters the market, there are a number of points where we would expect to see buying support:
  • 2090 at the short-term trend-line.
  • 2040 at the March lows.
  • 1970-1980 at the December lows and the long-term trend-line.
  • That would be approx. a 6% correction.
  • We are due for a correction, but only time will tell as to when.
  • We remain cautious.

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