HedgeFundLIVE — Let’s rewind back to exactly one year ago on April 6, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:
So the Spooz settled right at the stop level requiring me to blow out of my market call for a modest 5-6% retracement in this impressive near 14% ramp from the February 5 lows. Since 1183.00 marks my exact point where I cry uncle (it’s never easy is it?), I could cling to my hope for a selloff to commence today, but why bother? The worst day since February 23 had the futures closing down 5 handles, and if one throws out the 10 point “slide” six weeks ago, then he or she has to go all the way back to February 4 for a session which produced more pain.
Other things that impress me include the SPX’s hard to believe recent 21-6 run which sounds more like the record of a top seed in the NCAA Men’s Basketball Tournament than the number of up vs. down days over the past 5+ weeks. I also like the solid closing NYSE Tick for consecutive sessions including last night’s month high of 1052 thereby signaling that large institutional money has started to funnel back into stocks. Throw in the fact that the only things on the calendar for the rest of the week are today’s release of the FOMC meeting notes, most likely a yawner given the inert Fed and its text of little consequence last month, and Thursday’s Jobless Claims data, which will pale in comparison to last Friday’s Nonfarm Payrolls, and what’s not to like? To be sure, volumes printed beyond pathetic numbers yesterday, but I will throw that out, for markets remain closed in Europe and many traders and managers are lounging in the Caribbean this week with hoards of kids off from school. Even if the quietness was legit, I would not care too much as the SPX grinded up 105% from 2002-2007 on effectively no volume. Finally, while great earnings initially sold off equities last quarter, with the financial world seemingly sobered up from the Greek hangover and Congressional reform of the banks no longer on the front of anyone’s agenda, it seems unlikely that we suffer through a reprise assuming companies supply us with good numbers.
So if I now officially shift my intermediate term bias to match my bullish stance over the long term, what do I view as my new target for the SPX? As I mentioned in a commentary a few weeks back, the three big up legs that followed the only 7+% retracements of the massive grind higher from 2003 averaged a subsequent return of 17.5% from the bottom which extrapolates to 1227. While 19.9% represents the best of those moves to correspond to a 1251 end game and a move to 1272 potentially taking the forward P/E to 16.4x (vs. the current 15.2x), effectively the upper bound for “richness” in the blue chip index before the collapse in 2008, my lack of 100% Rah Rah bullishness makes the 1227 target, or a 3.7% shift up from last night’s close, just fine… for now. For completeness, I will place a stop 2% lower at 1159 at which point I will recognize my getting caught in a whipping maelstrom and need to re-evaluate once again. As I said, it’s never easy is it?
S&P 500 June E-Minis Key Technical Levels
Support: 1174.50, 1166.25/65.25, 1161.25/60.00, 1156.50, 1147.75, 1145.50
Resistance: 1183.00/83.75/85.00, 1190.00, 1195.00, 1198.00, 1200.00, 1210.00
Where we were then:
S&P Futures
Open: 1183.00
High: 1188.00
Low: 1177.25
Close: 1185.75
Where we are now:
Last: 1330.50
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