The S&P 500 reached the top of its range yesterday at 1220, before selling off at the end of the trading session. My read is that the bounce we called early last week is likely to give back some ground. Whether it’s a consolidating pause in a larger move up, which I still believe is a good possibility, might be proven by the 50 day MA at 1173. If it breaks, then I will be looking for support at the bottom of the range, around 1125.
We have done some buying over the last week, and look to do more during the consolidation…providing, of course, we don’t see an acceleration to the downside. If we clear October without any unpleasant surprises, we will be heading into a time of year that is commonly good for stocks. However, looking at a long term chart, there are some technical headwinds we need to keep in mind: