S&P 500 STRATEGY: LONG HOLD – CAUTION
- The S&P 500 fell for the 4th consecutive week and we are now down 5 weeks from the highs. The S&P 500 lost 1.9%.
- The short term trend has turned down and the intermediate trend has turned neutral. As a result we are issuing an extreme caution on the stock market.
- We rolled over at major resistance of the downtrend line from the October 2007 highs.
- We are currently testing the 200 day MA near 880 and major support is visible down to 850 and the 100 day MA.
- Below 850 the major bear market would resume.
- Only above 900 and especially above 920 will we resume the recent bull market rise.
- Weekly indicators remain in an uptrend and there are no negative divergences present. Negative divergences at significant tops are usually seen before we begin the real bear market. This suggests to us that once this current down phase completes we will resume the uptrend and see new highs.
- We have stated that we believed that our highs would be seen centered around July 20 based on previous cycles.
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- Stock markets continue their recent downtrend.
- Our July 20 date (or thereabouts) is now appearing as a potential cycle inversion meaning we will see a low rather than a high.
- Bonds continue their recent rebound as demand at recent auctions remains very firm and bonds are responding to weakness in the stock market.
- Gold continues to falter even as the US$ index is going nowhere. Gold continues to trace out a possible head and shoulders bottoming pattern.
- The Energy Index continues its recent downtrend and the Amex Oil Index (XOI) has issued an intermediate sell signal.
- It was a dismal week for the TSX Composite as all sub indices fell except for the depressed Healthcare sector.
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