S&P thoughts from firm

As seen above, the S&P 500 ran into another spot of resistance (orange lines and purple arrows) at the
875 level. The index still remains above its’ up trend line (green dotted lines), though a trend line that is
less accelerating in nature. A close back below the 850 level is likely put the market on the defensive a bit. On a
violation of 850 the market may look to stabilize at the 825 level, which would be a test of the recently broken
downtrend line (red line).
Volume was better on Friday, however the CBOE Total Equity/Index Put to Call Ratio (not seen here)
slipped back under 0.72. Typically levels near or below 0.70 are short-term negatives. Additionally the AAII
Bearish Sentiment Survey has seen the number of bear’s contract from 70% just 5 weeks back to 35.86% in the most
recent survey. Given the contraction in bears and put/call we would expect some softness to work into the market in
the next few days.
Unlike just several months ago where all stocks were correlated with the market, many stocks are now
not correlated. Thus there is no reason to indiscriminately sell stocks across the board just because the
market may weaken a bit. We would apply unique risk management techniques to each of your names and let
them be taken out (ie. stopped to cash) or not naturally.



posted by Peter Greene