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Wall Street Week Ahead: Waiting for technical signals

Fri Aug 17, 2012 7:04pm EDT

NEW YORK (Reuters) – The SP 500 tortoise continues to kick a skeptics.

In a deficiency of information or process catalysts and with a SP 500 nearby four-year highs, marketplace participants are anticipating technical indicators reason a clues on either bonds will sell off into Sep following a slow-speed rally.

The SP 500 is a meagre 0.06 percent divided from shutting during highs final seen in a pre-crisis days of Jun 2008, even as an unimpressive gain deteriorate draws to a close. The appearing U.S. presidential choosing adds to a uncertainty, and vague mercantile information creates any play on serve mercantile impulse from a Federal Reserve a unsure gamble.

“I’m not laying out any new shorting strategies on fear a Fed could come in,” pronounced Brian Amidei, a handling executive during HighTower Advisors formed in Palm Desert, California.

True to form, marketplace volumes have dusty adult in August. To some, a miss of volume is a transparent vigilance of a relations debility of a new rally. Wall Street this week posted a dual lowest volume days of a year, not counting half-days.

What has some other strategists shaken is what they see as relations relief among investors. Volatility levels as pragmatic by a CBOE Volatility index .VIX, or VIX, are during their lowest given Jun 2007.

“We petition we to lift money into strength forward of a pointy and quick late summer squall,” Richard Ross, tellurian technical strategist during Auerbach Grayson in New York, pronounced in his latest note. “With both volume and sensitivity absent from a allege … conditions are developed for a fast risk reversal to a mean.”

The VIX sealed Friday during a lowest spin in some-more than 5 years, a time when a SP 500 was hovering nearby 1,500 – a spin it has unsuccessful to proceed given a 2007-2009 selloff.

The SP 500 draft is somewhat some-more bullish than a VIX. After a high arise to mangle by 1,400, a index seesawed around that spin for about 7 sessions in a settlement famous as a dwindle formation. (Why? It kind of looks like a flag.)

Thursday’s allege to four-month highs and Friday’s acknowledgment of a new highs infer 1,400 could spin technical support.

Frank Cappelleri, U.S. marketplace technician during Instinet in New York, pronounced a laterally pierce after a 1,400 mangle adult indicated converging and a low volume was standard of such a pierce in late August.


The mins of a latest Federal Reserve process cabinet meeting, due Wednesday, could be a week’s prominence in terms of calendar events as bets on involvement in support of a economy are partly to censure for a new melt-up.

But with a Fed’s annual mercantile conference starting a following week during Jackson Hole, Wyoming, a Fed mins could infer to be an deficient marketplace driver.

“The mins are useful since they exhibit some of a granularity of a discussions,” pronounced Lawrence Creatura, portfolio manager during Federated Clover Investment Advisors in Rochester, New York.

“If a Fed had some arrange of sorcery elixir to repair a economy woes,” he said, “you would have already seen it.”

The behind finish of a week is complicated in housing zone information with home resales on Wednesday, new sales on Thursday and building permits on Friday.

Housing information has been a guide of wish for a recovery, and marketplace participants will concentration on any alleviation as a pointer a economy will continue to grow, despite slowly.

“There’s been a lot of speak about a spin in genuine estate and that it has bottomed,” pronounced HighTower’s Amidei. “I don’t know if we see a spin only yet.”

Just over a dozen SP 500 companies news gain subsequent week, with a prominence Tuesday as Dell (DELL.O) and Best Buy (BBY.N) post their scorecards. Lowe’s (LOW.N) reports on Monday and Hewlett Packard (HPQ.N) on Wednesday.

Of a 475 companies in a SP 500 that have reported gain this season, 68 percent have kick researcher expectations. That is aloft than a long-term normal of 62 percent and matches a normal over a past 4 quarters.

(Editing by Leslie Adler)

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