BarroMetrics Views: S&P 2014-03-27
We are starting to see signs of a decoupling of the belief in the FED and US Stock Market health. Admittedly preliminary signs but they are worth noting.
Figure 1 shows 3 events.
- Number 1 was a retest of the breakout on good volume and range. The down move was not in a response to any external news. In this run up, we have tended to see down moves on stirred by some ‘bad’ news.
- Number 2 were two consecutive days of one-time frame markets. Steidlmayer used to say that ‘trend days (one-time frame) are not good continuation days unless they are the start of a move’.
- Number 3 was another trend day down after an anemic rally (inside day) on March 25.
So, we are seeing weakness, despite Yellen comments of support and reassurances, without any news catalyst. Perhaps US Stocks are returning to the ‘old normal’? As I said early days yet, but I am seeing some warning signs of risk returning to the S&P.
In the meantime, the key will be the support level at 1841.00. A bearish conviction close below it will suggest a test of 1745 to 1741. A successful test should result in a new high.
FIGURE 1 S&P Cash