BarroMetrics Views: S&P At A Cusp
It seems to me the S&P is at a cusp.
I originally thought we were repeating the 1966 to 1982 structure. I formed this view in 2000 and to date the analogy has served me well. This June price action has raised another alternative.
Let’s start with the original analysis – Figure 1. Ideally I was looking for sell-off in February the low of which would serve as a launching pad to the high in Sept/Oct, above 1576 but below 1736. The low in March 2011 was shorter than I expected and the following upmove was not supported by volume and range. This suggested a correction in June that would bottom June 18 to 21 and a correction that would not see acceptance below 1249 (March lows). From there we’d see a strong thrusting move into Sept/Oct.
The second alternative was: the March lows would not hold and a top in Sept/Oct 2011 that would not exceed 1371 (May 2011 high).
At time of writing, the S&P is moving into the 1249 area with increasing volume. This tends to suggest we’ll not see that level hold. Add to that the fact that the world now seems to be focusing on the 1250 area and you have reason to believe we’ll see this low occur above or below 1250.
We’ll should know by week’s end if 1250 will hold at this test. In turn that will give us a map for the rest of 2011.
FIGURE 1 S&P Scenario 1
FIGURE 2 S&P Scenario 2