The S&P 500 is at a crossroad

Posted by David Rosenberg - Gluskin Sheff

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Market Musings & Data Deciphering
Deep Dish with Dave

I see once again that the S&P500 is at a crossroad, but this time after a huge bounce. The market is having as much trouble now with resistance levels as it was encountering difficulty breaking below support levels just a short month ago.

Currently, the S&P 500 is a lock between 1,000 and 1,200 and we are now right at the midpoint. This range-trade pattern will break at some point and my sense is that it will be to the downside, and at that time we will see who has the cash (to put to work) and who’s left with the trash (and about to be trashed).

The level of complacency over the economic outlook is palpable and so reminiscent of the fall of 2007 when everyone believed the Fed could navigate us into a soft landing in the face of a credit collapse. Now the pundits have all but abandoned the ECRI index as a leading indicator (even the architects have) of economic activity. The ISM is dipping, but still above 50, didn’t you know. Corporate earnings were stellar in the second quarter — who cares if the results were skewed more to April than June? The savings rate has spiked to 6.4% in June, and many pundits see this as a valve for the U.S. consumer to reload the spending gun as opposed to a new secular theme of frugality.

… the whole report HERE