Many traders believe the S&P 500 ($SPX) is technically breaking down from a Head and Shoulders pattern and is headed back towards the $875 - $900 level. The majority of analysts, managers, and commentators are bearish on the world economy and the double dippers have been all over the news recently. However, these traders and individuals are ignoring a number of factors.
1.) The S&P is still very much in an intermediate-term uptrend. 2.) Companies continue to report improving and positive earnings. 3.) M&A activity is alive and well. 4.) Problems in Europe are easing and being contained. 5.) China is showing signs of a soft landing. 6.) Consumers are still spending.
1.) The S&P is consolidating after a huge run. 2.) The 38.2% Fibonacci retracement level for the S&P 500 is at $1,008. 3.) All technical indicators are oversold on a long-term and intermediate-term basis. 4.) $SPX's long-term support is at $1,000. 5.) $SPX has formed a long-term Expanding Triangle formation and is near support 6.) $SPX has formed an intermediate-term Bullish Wedge formation and is near support.
For these reasons, the S&P 500 is a BUY between its current level of $1,030 and $1,000.
$SPX 3-Year Weekly:
$SPX 1-Year and 4 Month Daily:
Disclosure: Long Stocks