The S&P 500 closed up at 2863 Friday after a week characterized by large intraday swings. On the economic front, retail sales were down a record 16%. However, there was also some positive news on the flip side. On Friday it was reported that the consumer sentiment index unexpectedly rose in early May primarily due to the fiscal stimulus measures, widespread discounting, and hopes of reopening. From a technical perspective, let’s look further at the S&P 500. After bottoming out on 23 March, it has bounced back crossing above that 2863 level (Friday’s close) for the first time on 17 April. During the next 4 weeks (now), the S&P 500 has crossed that 2863 level seven times and we seem to be range bound about 200 points between a low of 2736 (21 April) and a high of 2939 (29 April). That said, I always like to compare the current market environment with previous similar ones. Looking back to my 26 October 2019 weekly update, I stated that “the S&P 500’s last record high was three months ago on 26 July. Since that time the markets have traded in a flat channel between a 2840 support line and that 3025 resistance line (note about 200 points). Breaking through and closing above that 3025 level would be significant and could hopefully be the precursor for another bullish run”. Well the S&P 500 did break out to the upside and we did have that bullish run until coronavirus hit. If history repeats itself, we could have another bullish breakout to the upside, plow past 3000, and once more challenge the most recent record high of 3386 on 19 February, which was only three months ago. For TSP TIPS, we’ll have the patience and will keep our current allocation hoping the above scenario becomes a reality with that improving consumer sentiment.
The S&P 500 closed up at 2863 Friday after a week characterized by large intraday swings. On the economic front, retail sales were down a record 16%. However, there was also some positive news on the flip side. On Friday it was reported that the consumer sentiment index unexpectedly rose in early May primarily due to the fiscal stimulus measures, widespread discounting, and hopes of reopening. From a technical perspective, let’s look further at the S&P 500. After bottoming out on 23 March, it has bounced back crossing above that 2863 level (Friday’s close) for the first time on 17 April. During the next 4 weeks (now), the S&P 500 has crossed that 2863 level seven times and we seem to be range bound about 200 points between a low of 2736 (21 April) and a high of 2939 (29 April). That said, I always like to compare the current market environment with previous similar ones. Looking back to my 26 October 2019 weekly update, I stated that “the S&P 500’s last record high was three months ago on 26 July. Since that time the markets have traded in a flat channel between a 2840 support line and that 3025 resistance line (note about 200 points). Breaking through and closing above that 3025 level would be significant and could hopefully be the precursor for another bullish run”. Well the S&P 500 did break out to the upside and we did have that bullish run until coronavirus hit. If history repeats itself, we could have another bullish breakout to the upside, plow past 3000, and once more challenge the most recent record high of 3386 on 19 February, which was only three months ago. For TSP TIPS, we’ll have the patience and will keep our current allocation hoping the above scenario becomes a reality with that improving consumer sentiment.