S&P 500 Price Perspective for Monday November 24, 2008
SPZ8 remains a traders market with a downside bias. The 816 to 837 level is a wall of resistance and will find selling unless the fundamental picture changes. Meaningful support rests at 737 and 718. 681 is longer term support. Bearish factors include: 1) The banking system looks far from being healed given the events at C and pounding of the BKX. Something needs to change – M&A? 2) Profit estimates continue to fall. 3) Some type of leadership or confidence builder must surface. The Fed has had limited success and fiscal policy is a mess. 4) The structure of the auto industry needs to be fixed. The biggest positive is the massive outflow of money from mutual funds and positioning of hedge funds. At some point, normalized valuation may matter, and the rumored appointment of Geitner as Treasury Secretary is a step toward stability. Obama is expected to announce economic advisors this week. Economically speaking, he seems to be trying to pattern the Clinton Administration, which will not hurt the market, although there is little policy guidance as of yet. The devil is in the details. Best guess for today’s range in SPZ8: 785 to 824.
Nick Kalivas
MF Global Research
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