Its Over, page-12831

S&P 500 rally not a sign bottom has been reached: Fundstrat

Timothy Moore

As much as some investors would like to think the overnight 2 per cent and broad rally in the S&P 500 marks a turning point, Fundstrat Global technical strategist Tom Newton says hang on.

“The S&P bounce might seem to be reason for hope for many investors; however, yet again, this has taken on characteristics of a counter-trend move and hasn’t exceeded areas of importance to expect meaningful lows are in place.

“As has been discussed, cycles point to bottoms in June, which also aligns with many weekly DeMark counts. Furthermore, the Elliott-wave structure of this bounce looks corrective (and not something which should extend past Friday).

“While the broad-based rally on Thursday is impressive, with groups like financials and discretionary making strong recoveries, it remains a concern for bulls that defensive groups have also turned in above-average performance this week.”

Newton said the S&P 500 would need to top 4114 “to give this rally some attention”. The index closed at 4057.84. Ten of the 11 S&P 500’s industry sectors ended higher.

“My expectations are that trading lows are certainly close. However, a move back to new lows is still needed to satisfy many of my technical concerns. I am willing to respect any outcome, but we’ll need more proof before blindly jumping onboard, which has failed miserably on prior 2-3 day rally attempts since April.”