Needless to say, I have been surprised before. And if a larger degree down trend is in its early stages, then surprises will be to the downside. 1360ish remains the key level for the bearish case on the S&P, and as the bellwhether index for global stocks and main proxy for global risk appetite, it will continue to be the market I watch most closely.
Tuesday, 12 June 2012
Yesterday and last night the S&P 500 rebounded sharply lower from the trend channel line that I first drew on the weekend, following a very brief false upside break. I will be surprised if the market stays in the channel for much longer. Given that there was a strong trend for more than two months, from the late March peak to the early June low, I now expect a period of consolidation lasting at least half that long, before the next trend develops. So I expect the S&P to move broadly sideways out of the channel at some point in coming days or weeks. Don't rule out a test of the June lows as part of that broadly sideways move.