Morning S&P firm comments

As seen the attached S&P 500 report is still below resistance at the 876 level having stalled there now on three separate occasions over the past three months. For prices to extend this rally that level needs to be taken out as it will show buyers are more aggressive and additionally comfortable with paying up for equities.

Volume on the S&P 500 is average and is reflective of indecision after the large rally. However, even with the market chopping around the last week and a half the S&P 500 still remains above its uptrend fan lines. The uptrend falling to the third fan line suggests while the market is moving higher its’ pace of ascent has slowed, which is not necessarily a bad thing. Only a moved back below the fourth fan line (Under 800) would suggest a retest was more likely rather than a rally extension.

On the sentiment front; the CBOE Total Equity/Index put to call ratio, the AAII Bearish Sentiment Survey and the VIX’s deviation from its 50-day moving average have all moderated from constructive levels to more neutral levels. This moderation is expected given the rally, however these indicators are not at levels that would suggest sentiment is overly bullish yet so at present these indicators are not flashing any sell signals.




posted by Peter Greene