Market setting up for a big move...

Hi there, and welcome back to CRI's S&P 500 blog.



After a short break on posting the S&P 500 blog CRI is back with a timely update. Considering the significant role employment figures play in both the political and economic arenas, it should come as no great surprise that the market has slowly worked its way back into resistance ahead of the July Employment situation report to be issued tomorrow by the US Federal Government.

Since the market broke down some eight weeks ago (as indicated by the crossing of the 13 EMA below the 30 SMA) investors have been best to sit on the proverbial sidelines. Indeed, even though short rates are at historic lows, if one had 'gone to cash' on that signal, they would be better off. Traders have been given multiple sell points on the way down with the most recent being a short entry signal back in the week of June 28th when prices broke back below 103.85 (with a corresponding stop just above 113.20). This stop has yet to be hit and traders should still be short.

Regular CRI readers will recall our S&P 500 'investor-sell' signal and CTS blog post in which we detailed various stock indicates rolling over. As well, because the options premiums were too expensive, no position on our part was taken.

Having said all that, we have a very important pivot point coming ahead of us. Since we are now at resistance (113.20) a solid move above will represent a break of the most recent sell pattern. A failure here would solidify this point as a top going forward. Consider too the significance of jobs to the upcoming US congressional elections this fall, and one can easily see why this point in the market is so important.

So, should we get a friendly number on Friday then I could realistically see this market moving right back up to the old highs. If however, we get an ugly number, we could break really hard. Since the 50% level is still very much in play, that would be my target (93.27) on any meltdown. Watch for any traps on the news release (give the market a good hour before making a decision....just my opinion)

Do you think anyone out in the broader public realizes the significance of this.....I doubt it....

That's all for this week,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
the-rational-investor.com