Skip to main content

Charting the markets: the S&P 500

I've been catching up with some recent market outlook reports from some of my favorite traders/writers and market-watchers.

For those who are actively trading (or watching) this market, one of the big topics being tossed about recently is the future direction of the S&P 500. Today we'll take a quick look at some recent market commentary on the US benchmark share index, as well as some other major market indices.

Before we jump into the S&P 500 charts, let's get a quick view of the markets and the economy as a whole. Here's what Frank Barbera had to say in his July 7 market-wrap for FSO:

"At this time it appears that going forward, instead of the data simply not getting any worse, the markets will increasingly demand to see tangible improvement,
proof that things are in fact getting better. As it happens, to date there is virtually no evidence that a material change for the better is underway. As a result, markets have entered correction mode which was predictable given the huge overshoot on the upside seen in recent weeks.

In my view, the odds are high that on the corporate front, the rally of the last few months has been about “hope” for improved results, and has been largely predicated on huge cost cutting steps implemented throughout the corporate world. In the weeks ahead we may see a market that softens further as it becomes clear the tangible proof the markets want to see in both earnings and economic figures is not immediately at hand."

Frank goes on to add that this current recession is not a cyclical affair, but is "most likely a structural contraction". This carries wider implications for the strength of consumer spending, corporate revenues, and resulting stock market valuations (P/E multiples). Read on for more of Frank's overview.

Also at FSO, Carl Swenlin had recently (July 10th) pointed to a technical break of the S&P 500's neckline support, saying that a resulting decline down to 810 was likely. However, Swenlin also noted that the neckline violation could mark "the end of a correction and a bear trap", though he did not find this scenario likely.

Chris Puplava follows up this discussion of the S&P pattern in a July 15 wrap-up entitled, "A Bipolar Market". As you can see from the charts included in Puplava's article, the S&P 500 made a quick recovery move to the upside after briefly breaking the neckline support.

Which brings us to the vital question:

"The question now is which will be the final outcome, a break above resistance or a break below support?"

Brian Shannon at AlphaTrends has also been keeping a keen eye on the S&P 500 in recent days. Yesterday, Brian shared some charts of the S&P 500 and thoughts on a possible (bullish) inverted head & shoulders pattern on the weekly chart. He cautioned that we'd still have to see more positive movement on the daily charts to take this pattern seriously.

For those who'd like to hear more about Brian's technical view of the market, check out this very recent (7/15/09) stock market analysis video on Youtube.

Popular posts from this blog

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean ...

Slate profiles Victor Niederhoffer

Slate's recent profile of writer/speculator, Vic Niederhoffer has been getting some attention from traders and finance types in recent days. I thought we'd take a look at it here too, to offer up some possible educational value from Vic's experiences with trading and loss. Here's an excerpt from Slate's profile of Victor Niederhoffer : " I've enjoyed getting your e-mails. It sounds like you've thought a lot about being wrong. Well, the reason you contacted me, to call a spade a spade, is that I'm sort of infamous for having made a big, notorious, terrible error not once but twice in my market career. Let's talk about those errors. The first was your investment in the Thai baht, which pretty much wiped you out when the Thai stock market crashed in 1997. I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in li...

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4. ...