Firm's S&P note

As seen in the S&P 500 research note the index ran into resistance at the 1,020 level but this is still well above its recent range breakout spot near the 950/930 area. So at this point while prices are drifting keeping things in perspective we are still in the middle of a higher level trader range (930/950 to 1,020) after spending the earlier part of the summer locked in the 850 to 950/930 range.

The recent weakness is a combination of the late summer doldrums and a mean reversion of the S&P 500’s 15.20 % run up (measured from its’ recent high from its low on 7/10). Anecdotal sentiment has investors still doubting the rally, under invested and extremely cautious. While this kind of sentiment exists it is hard to expect anything more than a minor pullback (5% – 7 %).

While late summer and fall seasonality trends typically line up in the negative return camp it appears that so many investors are relying on it as gospel that maybe it won’t happen this year.


posted by Peter Greene