S&P Levels-Post from firm

As seen in the attached pdf the S&P 500 broke back above its 200-day moving average yesterday. While this is more psychological than anything else it does suggest upward price momentum has been persistent, which is a more significant development. The next upside target for the S&P 500 comes into play at the 1,000 level while key downside support remains in the 875 area. As long as the 850 level is not violated the fears of a deep corrective wave remain off the table.

This current run up off the lows is very reminiscent of the run up off the late 2002/03 lows when breadth remained bullish for quite some time and powered stocks higher in rapid fashion without any significant pullbacks, even in with the back drop of periodic high bullish sentiment readings. So far the similarity between the 2002/03 rally and this current rally is the persistence of consistently strong internal readings. However this time around we have not had sentiment reading get bullish even in the face of a price melt up. In fact anecdotally sentiment remains extremely cautious, which is bullish and suggest under investment to equities still exists.


As long as sentiment remains cautious and tape action continues to strong through bullish advance to decline and up to down volume readings then the market can still work higher





posted by Peter Greene