John Kosar, chief strategist at Asbury Research, said he’s watching the trading around the 200-day moving averages. “If it gets close to it, that brings out people that missed the last rally and want to participate, “he said, adding the S&P is in the zone. Its 200-day was at 2,053 Monday, four points below the closing level.
“It’s a place to kind of buy off of what a lot of people look at as the major trend,” he said. “The advantage from an investment standpoint is you’re going to find out really quick whether you just bought the low or you bought the trend change, and you’ve got to get out of the way. That’s the value of these areas.”
Kosar said he’s also watching the SOX, semiconductor, index which is near its 200-day, and Cisco, which has been selling off in a negative trend. He said Cisco is tightly correlated to the Nasdaq 100 and could be indicating that index will come under more pressure. “Semis lead tech. Tech leads the market,” he said.
Asbury Research Subscribers: Charts and much more detail on our current outlook for the US stock market are available in Friday’s Week Wrap-Up and Monday’s Keys To This Week reports, which can be accessed by logging into the Research Center.