Conclusion SPX at
1264 slightly gained back some prior week losses this past week, but it was a volatile week of ongoing EU Sovereign Debt Crisis uncertainties. The 200-day average (
1272) continues to be tested and is current, key resistance. On we go: European assurances regarding the EU Sovereign Debt Crisis rally global markets, then surprises and disappointments drop the markets. As noted last week, once there is a temporary fiscal fix for Greece, the worries will focus on Italy and the volatility will most likely continue. Investor sentiment has shifted to the upside as there has not been terribly negative USA or Global economic data. The bottom appears to be in for the S&P 500 in 2011 and the question is now: what is the top? A short-term consolidation and stabilization from the October 27 & 28 rally peak is in progress, which is beginning to look more as a continuation pattern to the upside. Ongoing negative USA and Global fiscal, economic, and political uncertainties will hold the market back somewhat, but a general uptrend should continue as the USA and Global economic data is indicating some growth.
1200 continues as the lower benchmark for the sentiment boundary between some optimism and significant uncertainties and is most likely bottom support. 1300 is the next sentiment boundary above, which signifies even more optimism, stronger economic recovery, and is ultimate resistance. Therefore the current trading range is 1200 -1300. A test of 1300 will most likely occur in November, certainly by year-end.
● Pre-Crash Close 1287 SPX continues below the August 1 pre-crash close of 1286.94. Previously SPX pinned through intraday on October 27. An eventual upside breakout sets up a test of the 1300 - 1305 area, the next major sentiment benchmark.
● 200-Day Average SPX has not been able to sustain a rally above the 200-day average of
1272.27, after first breaking through on October 27 and 28 and testing November 8 and 9.
● Pre-Crash Close 1260 SPX has once again rallied above the August 3 pre-crash close of 1260.34, which has acted as both resistance and support. This places the S&P 500 back to the early August days of debt ceiling political gridlock and the S&P downgrade of the USA from AAA.
● 300-Day Average SPX continues above, but testing, the ascending 300-day average of 1250.37, after first breaking through on October 24 and testing since.
S&P 500 Outlook The intermediate-term trend indicator continues
bullish. The long-term trend indicator continues
bullish. At the present level of the S&P 500, we continue moderately bullish for November and December, and continue bullish long-term (2012).
Global and USA Economy No recession or strong recovery appears probable, just slow to very slow growth in the developed economies and strong, but slowing, growth in the emerging economies. Warren Buffet is saying the recovery is proceeding and no recession is ahead. Lakshman Achuthan of ECRI says the recovery has been underwhelming and that an American Recession is ahead. A video of Achuthan's interview and prediction of the recession is
here. Some USA economic indicators have been very encouraging: decreasing weekly unemployment claims, an advance estimate Q3 GDP of +2.5%, a rebound in consumer sentiment, and post-recession highs in personal income and consumer spending. The October "jobs report" was neutral with an unemployment rate of 9.0%, a jobs gains of +80,000 will probably be revised upward, and the prior months jobs gains were in fact revised upwards. For now, the USA economic bottom appears to be in and an upwards growth trend, albeit slow to very slow, is emerging intermediate-term.
Disclosure & Portfolio We have no position in SPX, SPY, or any other related ETF as of this posting. We will so note such positions at the time of a weekly posting, but not any short-term trades, such as intraday or intraweek trades, between the weekly postings.
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