Taking Stock

The S&P 500 Index at 1271.91 and falling, just slipped below the lower bound of an upward-slanting trend channel that began at the 3/12/09 close of  679.53.  The market has been trending sideways since mid-February of this year.  Sideways moves are hard to figure.  Is it a pause on the way to new highs or the beginning of a new downward phase?  My money is on the latter.  Corporate profits are ridiculously high - but none of that is based on growth.  And what growth prospects do you see on the horizon, at any term length?

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UPDATE:  Here are some views posted by Rebecca Wilder at AB.

Terrible GDP Report

Slowing Global Economy

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There is a support band around 1256 to 1272, starting in late March of this year.  If that gets broken, the next potential support might be around 1000 to 1050.   Beyond that, it's the 2009 bottom.

Long and short term momentum measures have been stagnant, at best, during this sideways phase, and are about to fall through 0.

I'm anticipating a big decline, but I've been pessimistic for the greatest part of a decade.

We shall see.

UPDATE 2: While I was playing taxi for granddaughters this afternoon, the stock market took a head-first dive into the sewer.   The DJI was down 265.87, or 2.19%.   The S&P 500 was off 32.89, or 2.56%.  The Nasdaq fell 75.37, or 2.75%.  The bluer the chip, the less the decline.  In other words, riskier issues overachieved in leading the losses.  The flip side of a flight to safety is a flight from risk.

This placed the S&P 500 close at the yearly low, negative for the year to date, and slightly under the 1256 to 1272 support level range cited above.  This is merely a peek over the brink, not a crash through the barrier.   But, with 7 straight down days (8 for the DJI,) it's pretty clear that upside momentum is spent for the nonce.  This does not guarantee an immediate steep drop. In fact, I would be quite surprised if there isn't a bit of a bounce tomorrow, since nothing moves in a straight line.  But I am now quite sure that over the next span of weeks to months stock movement will be negative.

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