After peeping out of the topside its ascending triangle, the S&P slid back inside the formation. They key now is whether the index can slice through 1375 before it closes below 1340.
Recent rallies have been turned away twice before at 1375 and U-turned three times at 1340. A third rejection at 1375 would only reinforce resistance, which means that bears would have a bright red sell here sign on the S&P’s chart. Each failed attempt to break on through to the other side would attract more sellers, making it harder for Wall Street to move stocks higher.
Like TEN wrote in our Dude, Where’s the Volume post, the lack of commitment concerns us. Top Equity couldn’t help but notice that Tuesday’s selloff was also the day with the heaviest traffic. In our view, this means any hint that the economy is tapping the breaks could generate a flood of sell tickets.
This week, economists expect a robust February Retail Sales report (Tuesday 8:30 am eastern). The consensus is a 1.2% jump. It’s a fairly high bar to clear on the heels of news that consumer tightened up in the Personal Income & Outlays report.
It will be even more concerning if all of the sales gains come from higher gas prices. The price at the pump is also like to show up in Thursday’s CPI and Friday’s PPI announcements. Rising inflation would make it next to impossible for the fed to launch QE3. No more easy Fed dollars could put the crimp on the digital money fed rally.
Top Equity News can envision the S&P bouncing between 1375 and 1340 until Q1 earnings and guidance gets started in April.
Stock Market Trends: Channel Surfing Between 1375 and 1340? is an article from: 
