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Equity Market Review
In the ollowing note, we take a look at some o the widely ollowed U.S. indices. As seen below, most o these indiceshave a similar pattern, broken and bouncing along near support. As they say, a picture is worth a thousand wordsand the story this picture tells is certainly a story that U.S. markets are still reeling, despite their recent bounce.Yesterday’s trading activity was a bit discouraging as it appeared to be the classic buy the rumor (buy the Spain bail-out), then sell the news. This “sell the news” session occurred or most indices right at overhead resistance. As wehave said or a while now, with summer seasonality, sporadic - and at times - conicting news ow out o Europe, U.S.indices would likely have a summer very similar to last year. Given the technical damage that many o these indiceshave suered, we will need more evidence, in the orm o bases orming, beore we can suggest a real turn has oc-curred. That said, in the absence o proper bases at present, tactical trading will likely be the most successul strategy.Stated another way, hit and run strategies seem to make more sense at present, as opposed to getting comortableand setting up a base camp. In trading environments like these it doesn’t pay to be a hero or frst one on the battle-feld, but rather, it pays to wait or reinorcements and ground to be gained, beore jumping in the ray.Bottoms tend to be a process, not a singular event, and typically occur when everyone becomes exhausted romtrying to call them and being wrong. At present, investors continue to look or the bottom with every tick down.Consequently, we don’t think we’ve seen one yet. That said don’t ret you’re going to be late to the party, or i a realand durable move is about to occur, not catching the low won’t put you at a disadvantage.S&P 500 resistance remains in the 1,336 to 1,340 zone, while support lies in the 1,270 level. Meanwhile, over on theNASDAQ Composite, resistance remains in the 2,900 to 2,890 area, with support at the 2,725 level.Now let’s move to the major indices on the pages below.