Tag: S&P 500

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S&P 500 reflects bullish LT sentiment

The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks. Congressional gridlock raised the probability even higher, but the market has brushed this aside, reflecting bullish long-term sentiment.

The S&P 500 rallied sharply off support at 1650. Follow-through above 1710 would indicate an advance to 1790/1800*. A 21-day Twiggs Money Flow trough close to zero indicates buying pressure. Reversal below 1675 is unlikely at present, but would warn of a test of primary support at 1630.

S&P 500

* Target calculation: 1710 + ( 1710 – 1630 ) = 1790

VIX retreated below 20, signaling low/moderate market risk.

VIX Index

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Short-term support for S&P 500 but long-term bearish

The September quarter-end often heralds a correction as fund managers re-balance their portfolios and shed under-performing stocks.

The S&P 500 is testing support at the May high of 1675 on the daily chart. The long tail on Monday’s candle indicates short-term buying support, but bearish divergence on 21-day Twiggs Money Flow warns of medium-term selling pressure. Breach of support and the (secondary) rising trendline would signal a test of primary support at 1625.

S&P 500

Selling pressure is also evident on the weekly chart, where a similar divergence warns of a primary reversal. This is a relatively weak signal, with 13-week Twiggs Money Flow elevated well above zero and primary support some way above the long-term rising trendline. Failure of support at 1625 would signal a reversal, but it would be prudent to wait for confirmation from the long-term trendline or other major indexes.

S&P 500

* Target calculation: 1700 + ( 1700 – 1550 ) = 1850

VIX crossed to above 15, but still indicates relatively low market risk.

VIX Index

Dow Jones Industrial Average broke its (secondary) rising trendline, signaling a test of primary support at 14800. Bearish divergence on 13-week Twiggs Money Flow warns of a reversal and breach of 14800 would confirm. Recovery above 15660 is unlikely, but would indicate a fresh advance.

Dow Jones Industrial Average

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S&P 500 follows through

The S&P 500 followed through above resistance at 1700, indicating an advance to 1800*. Bearish divergence on 21-day Twiggs Money Flow  suggests selling pressure, but this is not as pronounced on the weekly chart and a peak above the May high would negate this. Reversal below support at 1675 remains unlikely, but would warn of another test of primary support at 1560.

S&P 500 Index

* Target calculation: 1680 + ( 1680 – 1560 ) = 1800

The Dollar Index is testing resistance at 82.50. Breakout would indicate the correction is over, suggesting an advance to 84.50. A 63-day Twiggs Momentum trough above zero would strengthen the signal.

Dollar Index

We received some bad data for gold from our Forex & Precious metals data supplier. Here is the corrected chart and our revised comments:

Spot Gold

* Target calculation: 1200 – ( 1350 – 1200 ) = 1050

Gold continues to test support at $1300/ounce. Breach would suggest another test of primary support at $1200, while failure of primary support would offer a target of $1050*. Dollar Index breakout above 82.50 would strengthen the bear signal. Recovery above 1350 is less likely, but would indicate continuation of the rally to $1400/ounce.

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S&P 500 breakout

Short candles on the S&P 500 indicate some opposition, but breakout above resistance at 1675 indicates an advance to 1800*. Follow-through above 1700 would strengthen the signal. The 21-day Twiggs Money Flow trough above zero indicates medium-term buying pressure — and a healthy up-trend. Reversal below 1650 is unlikely, but would warn of another test of primary support at 1560.

S&P 500 Index

* Target calculation: 1680 + ( 1680 – 1560 ) = 1800

The VIX below 15 suggests low market risk.

VIX Index

The TSX Composite Index is advancing towards resistance at 12900. Breakout would signal a primary advance, with a long-term target of 14000*. Follow-through above 13000 would strengthen the signal. Breach of the declining trendline on 13-week Twiggs Money Flow would also suggest improving buying pressure. Respect of 12900, however, and reversal of 13-week TMF below zero, would warn of another test of 11750.

TSX Composite Index

* Target calculation: 13000 + ( 13000 – 12000 ) = 14000

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S&P 500 hesitates but ASX 200 follows through

The S&P 500 is testing resistance at 1650. A 21-day Twiggs Money Flow trough above the zero line would signal a healthy primary up-trend. Target for the advance would be 1800*. Follow-through above 1660 would strengthen the bull signal, but reversal below 1640 would warn of another test of 1600 — and a possible inverted head and shoulders pattern (as shown by the arrows) if support at 1600 is respected.

S&P 500 Index

* Target calculation: 1680 + ( 1680 – 1560 ) = 1800

The ASX 200 found resistance at 4900, with a tall shadow (or wick) on Wednesday’s candle. A healthy start this morning suggests a test of 5000. Breakout would offer a long-term target of 5850*. Reversal below 4860 remains unlikely, but would warn of another test of support at 4650.

ASX 200 Index

* Target calculation: 5250 + ( 5250 – 4650 ) = 5850

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Dramatic fall on S&P 500 – April 16th

Apologies. I deleted this April 16th post by accident.

The S&P 500 fell 220 basis points (2.2%) on Monday, blamed variously on disappointing growth figures from China, the fall in gold, and the Boston Marathon tragedy. I still suspect that the primary cause is the tectonic shift last week by the Bank of Japan.

“Where is the fall?” you may ask, when viewing the chart below. That is what I enjoy about monthly charts: they place daily moves in perspective. Breach of support at 1540 would indicate a small secondary correction, while breakout below 1490 would signal a correction back to the primary trendline. But the primary trend remains up. Only a fall through 1350 would suggest a reversal.

S&P 500 Index

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2013 Profit Margin Expectations | Business Insider

Sam Ro writes:

Overall, Wall Street’s strategists are bullish on stocks for 2013 for various reasons.

One reason worth taking a second look at is expanding corporate profit margins, which are already at historic highs.

A slew of experts like GMO’s Jeremy Grantham, SocGen’s Albert Edwards, LPL Financial’s Jeff Kleintop, and John Hussman think these margins are unsustainable.

But the equity analysts and the companies they cover disagree……..

That is the medium-term outlook, but one has to question whether low effective tax rates and low interest rates are sustainable in the long-term. A weaker dollar has also boosted the conversion of offshore earnings but that is a one-off gain unless the dollar continues to weaken.

Read more at 2013 Profit Margin Expectations – Business Insider.

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S&P 500 with Share Weighted Earnings | The Big Picture

Fusion’s Kevin Lane observes that share-weighted earnings for the S&P 500 are “very close to tilting back into the negative zone”.

….With a bit more than half the companies reporting, S&P 500 earnings YoY (on a share-weighted basis) are only up 3.3 %.

via S&P 500 Index with Share Weighted Earnings Average | The Big Picture.

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The impact of QE3

Expect stocks and commodities to rally – especially gold.

The S&P 500 followed through above 1440, confirming the primary advance to 1560*.

Index

* Target calculation: 1420 + ( 1420 – 1280 ) = 1560

Spot gold broke through short-term resistance at 175, headed for a test of $1800/ounce*.

Index

* Target calculation: 1650 + ( 1650 – 1500 ) = 1800

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BOB JANJUAH: Time For Action, Warning Over – Business Insider

Sam Ro of Business Insider reports on Nomura strategist Bob Janjuah’s August 21 note:

“I now think the correct thing to do – as I also said in April and June – is to prepare for a serious risk-off phase between August and November,” [Janjuah] reiterated. “Over the August to November period I am looking for the S&P500 to trade off down from around 1400…by 20% to 25%…to trade at or below the lows of 2011.”

He argues that the key drivers of this sell-off will be disappointment at next week’s Federal Reserve Jackson Hole speech and realization that the ECB won’t be be able to deliver on their promises.

via BOB JANJUAH: Time For Action, Warning Over – Business Insider.

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