S&P 500 buoyed by breadth & volume indicators
Mary Ann Bartels +1 646 855 0206
Technical Research Analyst
Concerns over the unprecedented move of taxing bank deposits as part of an aid
package in Cyprus renewed concerns of the Eurozone crisis and triggered a selloff
for global equity markets on Monday. But with breadth and volume indicators
strong and confirming new recovery highs in the S&P 500, Monday’s early
weakness held above support at 1530-1525 keeping the recent near-term
breakout intact and pattern bullish for the S&P 500. On a relative basis the US is
strengthening and set up to remain strong vs. the rest of the world (side bar).
S&P 500 levels: support: 1530-1525; Resistance: 1550-1576
The S&P 500 continues to test resistance at the longer-term range highs at 1550-
1576. With breadth and volume confirming the rally, the potential is for continued
tests of this area, where a break higher would target additional resistance at
1600-1625. Holding above 1530-1525 keeps the immediate pattern bullish. To
reverse the uptrend from November, it would take a loss of 1510-1500. This is the
rising 50-day moving average and the uptrend line from November.
II % Bears below 20% for first time since April/May 2011
Investors Intelligence (II) % Bears moves to 18.8% and to a contrarian bearish
level below 20% for the first time since April/May 2011. Sentiment is a condition
indicator and contrarian overbought readings can last weeks and even months.
Stock ideas: take a step back & look at BIG BASES
Last week (Market Comment, 11 Mar 13) we provided a secular sector review.
This week we take a step back and highlight stocks with BIG BASES that are
sleeping giants just waking up. Stocks with big bases or bottoms to focus on are
LOW, TWX, and WHR in Discretionary, PG in Staples, NBL and RRC in Energy,
AXP in Financials, BMY and PKI in Health Care, FDX, JEC, and MMM in
Industrials, GOOG and YHOO in Info Tech, CX in Materials, and VZ in Telecom.
CX, GOOG, MMM, and VZ are also on the Most Attractive Buy (MAB) List.
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