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For S&P 500, the Key Number Is…

정석_수학 2015. 6. 5. 12:25


http://blogs.wsj.com/moneybeat/2015/06/04/for-sp-500-the-key-number-is/



For S&P 500, the Key Number Is…

 
  
 
Jin Lee/Associated Press

We’ve been writing for a while now about the upper end of the S&P 500′s tight trading range, which roughly lies around the 2120 mark. Attempts to pierce that level and build another leg higher have been rebuffed several times.

Now it’s time to start turning our attention to the lower end. The mark to watch, and it’s a key one on Thursday, is 2100. Yes, that’s an awfully tight range, but in the short term, that’s where the game is being played. If you pull the timeline back a bit further, the lower range changes, but the upper hasn’t.

“The closing ranges have converged even tighter as the last four sessions have all settled within 0.35%,” noted Timothy Anderson at MND Partners. “There has been some intraday volatility during this stretch, with the buyers taking a stand at S&P 500 2100 and the sellers snuffing out rallies at 2120.”

The move is being tested on Thursday. An early feint at that level was rebuffed, but another this afternoon has seen some follow through, with the S&P 500 currently down 20 points at 2094. The Dow is off about 180 points at 17896.  ”As you can see, after several retests S&P has broken the 2099 lows,” UBS’s Art Cashin, who’d been eyeing the level carefully, wrote in a midday note. “A break of 2088 could do real damage to the charts.”

Don’t panic should the level get pierced again this afternoon, because what really matters in these matters are the closing levels, and even beyond that, traders will want to see not only that a level gets taken out, but that it gets taken out with some authority.

Should 2100 get breached, the damage still won’t likely be major. Longford Associates’ Joan McCullough suggests the next support level would sit around 2080. We would suggest that the really key level to watch, if you’re worried about some real damage, would be roughly 2050. The index has been above that line since early February, and it also coincides with the index’s 200-day moving average (2045). Even that would represent a drop of less than 4%, hardly a world-shaking sell-off.

Mr. Anderson, for one, would like to see a bit more action in equities. “While the lack of volatility and volume in equity markets has been great for coffee vendors in lower Manhattan, it’s left stock traders yearning for the action we’ve seen this week in the currency and bond markets.”

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