Stock-Markets
The main resistance level of about 1000 continues to hold for the S&P 500. This line is the barrier that has held the broad-based index since October 2008. As the new 4-month trading cycle began in early July, time is slowly running out for any additional advance. The mid-point of the cycle is in late August. This means that downward pressure can be expected to build in the second half of the cycle which is September and October.
Probability models indicate that there is only a 25% chance of the S&P 500 trading in the 939-1202 range over the next 100 days. In the August newsletter (pages 8 & 9), the importance of the 1000 level is explained plus the historical pattern of bear market bottoms since 1900 is reviewed. This combined data continues to imply a high probability of lower numbers in October. Bottom line: The S&P 500 is anticipated to have an positive bias in August. That pendulum should begin to shift in September and October. Models indicate the low of the current 4-month trading cycle is in late October.
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