Excerpt From: Keys To This Week
Asset Class: US Equities
Topic: Buying Opportunity, Or Correction Coming?
Date: June 10th, 2013
“the US stock market is at a key near term inflection/decision point, from which its larger November advance must resume if still valid. The fact that first support at 1604 to 1597 in the S&P 500 (SPX) was tested late last week amid near term oversold conditions, and that our initial 1600 downside target has been met (from May 31st), is why the market rebounded so sharply on Friday. This first support was an obvious place for those who missed some or all of the November advance rally to “get back in”, with a well-defined risk. However, as long as the VIX remains above 14.00 and corporate bond spreads continue their recent widening, the market is going to have a hard time extending Friday’s gains. If last week’s late rally does fail this week, we are watching SPX 1642 to 1654 as a potential place for it to happen.”
Chart 1 above plots SPX daily since February and highlights some key price levels above and below the market. Below the market, primary support is at 1607 to 1597 this week and represents the 50-day moving average and the April 11th benchmark high. This level was tested and held late last week. Above the market, 1642 and 1654 represent the 50.0% and 61.8% retracements of the May 22nd to Jun 6th decline. This is where the May 22nd bearish reversal should resume from if it is just the beginning of a larger, uncompleted decline.
The chart and corresponding commentary/analysis/strategy above (green highlights) is an excerpt from our Monday June 10th Keys To This Week report (access requires subscription).
Keys To This Week, one of 8 different reports that we produce for subscribers throughout the month, is a detailed weekly outline of key market factors and corresponding charts pertaining to the US stock market and market sectors, US interest rates, the US Dollar, and economically-influential commodity prices that are most likely to influence US financial market direction during the next one to several months.
The newly-updated chart below shows that the S&P 500 subsequently peaked at 1649 on June 10th, the day of our report, and again at 1654 on Tuesday June 18th.
As of this morning, SPX has since collapsed by 55 points or 3.3%.
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