S&P 500 Down More Than 1% for First Time in 26 Days

For the first time since April 11th, the S&P 500 closed down more than one percent. As shown in the chart below, this is the longest stretch since last Fall that the S&P 500 did not have a one-day decline of one percent or more.

click to enlarge

So where do we go now? The S&P 500 recently broke through a downtrend line that had been in place since the index's all-time high in October. Past resistance usually acts as future support. If so, the current sell-off should be short-lived. If support is not held, expect sentiment to take a turn for the worse in the next few days.

Comments

[rufusmcbufus:]

It's about damn time.

2008 May 07 05:32 PM

[Paul D. Cas...:]

The S&P has just recently made a higher intermediate high for the first time since last October. By my count;

08-15-07 close = 1,406.70 = higher low,
10-09-07 close = 1,565.15 = higher high,
01-22-08 close = 1,310.50 = lower low (first lower low since Nov 02 which was also the last lower low of the post-bubble bear market),
02-01-08 close = 1,395.42 = lower high,
03-10-08 close = 1,273.37 = lower low,
05-06-08 close = 1,418.26 = higher high (first since Oct 07)

What this most recent higher high means is a new uptrend (ie, bull market) has begun. The last time the S&P made a higher high after a series of lower highs and lower lows was in Mar 04. That uptrend lasted until the lower low in Jan 08 (ie, 3 yrs and 10 months). The only event that could occur which would annul the new bull market thesis would be a take-out of the Mar 08 closing low.

2008 May 07 06:46 PM

[jr7107:]

With the Financials hemorrhaging so much capital, I am having difficulty believing that the market can rush higher with that occurring. Can the S&P rally without the 15% or so that the Financials consume?

2008 May 07 10:30 PM

[sorgmot:]

If Elliott wave patterns since the high in October 2007 are considered, one could say that there has been a 1, 2, 3, 4, 5 down wave ending March 15 2008 (labeled I) and that an A,B,C pattern upswing is currently in process (labeled II) . It could be ending now or later in May 2008 at which time another down wave (labeled III) could begin.

We view the current period as one of downward stock price corrections ending in October, 2009. That is typical for the business cycle which has been through its credit crisis.

2008 May 08 03:09 PM