S&P 500 OVERVIEW
S&P 500 The S&P 500 closed at 1277.81 on Friday, January 6, 2012 and has rallied above the 200-day average. The S&P 500, SPX, performance to-date:
Week, Month, Quarter, Year: +1.61%
2011: +0.00% (+0.04 points)
The S&P 500 is up +88.88% since the March 9, 2009 market cyclical bottom. The SPX closing at 1363.61 on April 29, 2011 was a multi-year closing high and the S&P 500 is now -6.29% below that peak, which means the S&P 500 has rallied out of a correction.
S&P 500 DAILY CHART
S&P 500 Daily Chart Below is the SPX daily chart from the July 7, 2011 closing peak (1353.22) to illustrate the August crash, subsequent rallies, and trading range.
Noteworthy Closing Prices
Current Close: 1277.81
2011 High: April 29 1363.61
2011 Low: October 3 1099.23
Market Cyclical High: April 29, 2011 1363.61
Market Cyclical Low: March 9, 2009: 676.53
S&P 500 Chart Review
Intermediate-Term Trend 25d avg > 50d avg, SPX > both, bullish
Long-Term Trend SPX > 10 month ema = 1253, bullish
Key Resistance 10-27,28-11 peaks 1285, 10-27-11 intraday high 1293
Key Support 11-8-11 peak 1276, 300d avg 1261, 200d avg 1259, 20d avg 1248, 50d avg 1241
Moving Averages above all major avgs: 20d, 50d, 100d, 200d, 300d, 400d
Uptrend Line below since 7-27-11; 3-9-09 close 676.53 up thru 7-2-10 close 1022.58
Downtrend Line below since 5-2-11, 10-9-07 close 1565.15 down thru 4-29-11 close 1363.61
RSI 14 Day = 72.23 is overbought, descending
RSI 28 Day = 67.41 is near overbought, level
MACD (12,26,9) = +3.54, descending, multi-year lo 8-10-11 (-19.97); multi-year hi 8-31-11 (+11.42)
S&P 500 SUMMARY
Commentary The S&P 500 has approached the late October highs but has yet to stage a full test or exceed. The rally since late November has been fueled by positive USA and Global economic data. The viability of the EU and Euro and the possibility of a recession in Europe have dampened the rally. This has resulted in a weakening Euro and strengthening US Dollar. Investor sentiment is leaning positive, but the specter of Europe remains. More consolidations and stabilizations are probable as the EU mess gets sorted out on an indefinite time-frame. Ongoing USA, European, and Global fiscal, economic, and political uncertainties are constraining any true rally up to the pre-August crash levels and the July peaks.
● 1200 continues as the lower benchmark and sentiment boundary between some optimism and significant uncertainties. SPX continues above.
● 1300 continues as the upper benchmark and sentiment boundary for near-irrational exuberance. SPX continues below.
● Earnings Season begins Monday, January 9, 2012 with Alcoa reporting. A very positive Earnings Season will be necessary to rally the S&P 500 above the pre-August crash levels, along with the EU being proactive and the Eurozone economy stabilizing.
S&P 500 Outlook The intermediate-term trend indicator is now bullish. The long-term trend indicator continues bullish. At the present level of the S&P 500, we are now bullish for January 2012.
Global and USA Economy A recession may in fact be underway or will soon occur in the EU. If true, that will significantly impact the USA and Global economies. To date, the USA economy has strengthened moderately. The USA is holding up the overall global economy, but this could be temporary if and when the EU begins to negatively affect the USA. No USA recession or strong recovery appears probable, just slow to very slow growth. This also applies to other developed economies. Moderate to strong, but slowing, growth is occurring in the emerging economies. Lakshman Achuthan of ECRI says the recovery has been underwhelming and that an American Recession is ahead. Some USA economic indicators have been very encouraging: decreasing weekly unemployment claims, a rebound in consumer sentiment, and post-recession highs in personal income and consumer spending. The USA third estimate of Q3 GDP of +1.8% was disappointing, but not disastrous. The BLS December “jobs report” was another encouraging report with a drop in the unemployment rate to 8.5%, a jobs gains of +200,000 which 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, continues.
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.
About the S&P 500 The S&P 500 has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities, it is also an ideal proxy for the total market. S&P 500 is maintained by the S&P Index Committee, a team of Standard & Poor’s economists and index analysts, who meet on a regular basis. The goal of the Index Committee is to ensure that the S&P 500 remains a leading indicator of U.S. equities, reflecting the risk and return characteristics of the broader large cap universe on an ongoing basis. The Index Committee also monitors constituent liquidity to ensure efficient portfolio trading while keeping index turnover to a minimum.
