Summary: The depth of the recent sell-off, coupled with the horrific and cowardly Boston Marathon bombing, seems to have shaken the confidence of the bulls a bit.  The next few days will be important in regards to near term direction.  We do not want to see yesterday’s lows violated as it will suggest, at least temporarily, buying power is exhausted. In our opinion, especially with the historically weaker month of May rapidly approaching, the market needs to rebound and recapture lost ground very soon otherwise, the long awaited correction may be at hand.

Anecdotal sentiment, which had the pendulum stuck on skeptical for most of this rally, seems to have taken a bit of a swing back to the complacency of late.  We even note the title of our last market note, “Teflon Market” as first hand evidence on the subtle comfort the upward market action has given us all.  Market breadth, which has improved, has started to deteriorate again, and now looks more like a bump form short covering than a continuation of the durable and strong breadth seen earlier in the advance.

Please see attached pdf for more details and charts.

Category: Technical Analysis, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Equity Market Review: S&P 500”

  1. Tacomaman says:

    Thanks for sharing BR! Looks like mr. volatility is back in the equity markets!

  2. Tacomaman says:

    Thanks for sharing BR! Looks like mr. volatility is back in the equity markets!

  3. rp says:

    Why are world markets crashing? Don’t Vote For Gold!

    http://www.cecm.sfu.ca.nyud.net/~rpearcea/dontvoteforgold.pdf

  4. Herman Frank says:

    Let it come down that 10%, I’ve got cash to invest …. I need lower prices! Thank you Mr. Market!

  5. nofoulsontheplayground says:

    When the current drop of the MID and RUT is viewed on a weekly chart, it looks like this is merely a back-test of the breakout above the spring 2012 highs.

    The disconcerting thing right now is the EEM (emerging markets). That chart is almost back to the fall 2012 lows. It is not very often we see this much of a disconnect between the US indexes and the EEM.

    The Trannies have what could be considered a H&S top on the daily chart that points to a drop to the 2012 consolidation area around 5200.

    Bears may think the end of the world is upon us, but this drop on the MID, RUT, and TRAN looks like a technical drop to back-test prior resistance, and we could probably extrapolate this read to include the broader indexes like the SPX and Dow.

    (I hope this is not a duplicate. It disappeared when I posted it)

  6. techy says:

    Thanks for sharing. Would be happy to pay for weekly or daily newsletters?