The S&P500 Is Stuck In This Range
- Posted by JC Parets
- on June 13th, 2012
If the stock market seems extra frustrating these days, you’re not alone. Market participants across the board don’t have much conviction in either direction. Both the bulls and the bears are frustrated and the Investor Intelligence newsletter polls confirm that.
Arthur Hill over at StockCharts.com has the perfect chart up today showing the S&P500 stuck between a “Rock and a Hard Place”:
We put up a post on May 25th showing how this potential rangebound market was setting up. And I wouldn’t expect a major breakout in either direction any time soon. I think a sideways market, at least for now, is OK. Remember, S&Ps are still working off a 30% move in 5 months (40% for the Russell2000). So yea, a sideways market, at least temporarily, is fine. It’s normal.
When we see price back above the 50 day moving average (or “rock” in this chart) then we can have more conviction to the upside. But I’d like to see the slope of the smoothing mechanism to be up, and that won’t happen over night. Meanwhile, the upward-sloping 200 day moving average (or “hard place” in this chart) should continue to act as support. New lows below that key level and we’ll have to reevaluate our bullish stance as a result.
The S&P500 is in a frustrating place right now. We have to deal with it.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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