S&P 500 Equity Market Review

Kevin Lane is one of the founding partners of Fusion Analytics, and is the firm’s director of Quantitative Research. He is the main architect for developing their proprietary stock selection models and trading algorithms. Prior to joining Fusion Analytics, Mr. Lane enjoyed success as the Chief Market Strategist for several sell side institutional brokerage firms. In those capacities he oversaw the firms’ research departments. He produced a broad range of widely followed institutional research publications ranging from industry specific notes to quantitative/fundamental reports on individual stocks. His buy side clientele consisted of many of the nations top money managers and hedge fund managers. Mr. Lane is a member of the Market Technicians Association.

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We wish there was more insight gained from our variety of S&P 500 market breadth indicators at present, however right now most of them remain in neutral status not yielding much information. That said the most useful look at the S&P 500 right now comes in the form of analyzing the various levels of support and resistance. As seen in the 31-day chart above since breaking near-term support levels at the 850 – 845 levels (double red lines) the index has moved lower.

Presently the S&P 500 is forming an every tightening triangular consolidation pattern between two converging trend lines (blue lines). A shorter-term trading direction will only be re-established once one of these levels (840 on the upside and 825 on the downside) is violated. A break above 840 then 850 would suggest that the recent test of the lows was a successful test and maybe a tradable low is forming, however a break below 825 would suggest the market is likely to leg down again and break the November lows.

Until one of these events above occurs the best thing to do is observe and wait for a good entry point

S&P 500 31-Day Chart

chart courtesy of FusionIQ

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