Home > Uncategorized > 2012/05/09: Quick Post: ALERT: Finely calibrated equities decision rests with Europe

2012/05/09: Quick Post: ALERT: Finely calibrated equities decision rests with Europe

© 2012 ROHR International, Inc. All International rights reserved.

After all of the major divergence between the US equities and Europe, the significant trend decision seems to be recalibrated around the critical lower supports in each market. The confluence of facts on the ground in Europe comes right into more important scheduled fundamental influences tomorrow, and a major raft of Chinese economic data on Friday. And it will all come down to the key 1,338 support level for the June S&P 500 future.

The reason for that is the weaker European markets already being down into or near lower critical supports. And that is consistent with current consideration of whether the US indices will sink back in to an entire lower range as well. If the stronger sisters are capitulating, we are fairly confident the weak sisters will be headed lower still in spite of the degree to which they have already dropped over the past month and a half.

 

Considering how far June S&P 500 future has fallen since shortly after the ECB press conference last Thursday (when it was still in the mid-low 1,390s), it is still only back around important support in the 1,355-50 area. Much below it is back in an entire lower range. And even if there is interim support around 1,300, the low end of the major lower range and Negated (i.e. false) DOWN Break from top last summer’s topping pattern is quite a bit lower than that.

That would be quite a spill for a market where a lot of folks are presuming corporate earnings will remain strong enough to encourage a move to at least 1,500 by later this year. And the only way it ends badly is if those corporate earnings (and possibly multiples at the same time) contract instead of expanding. While the mantra of the perma-bulls has been “Europe doesn’t matter”, were going to find out one way or another.

General Market Observations and EXTENDED TREND IMPLICATIONS

Even as bad as the market has performed since last Thursday, unless it posts Closes (including a weekly Close) back below that 1,338 Tolerance of 1,355-50 support it maintains its overall uptrend. And the consideration of just how much worse it might do if it violates that support (which will also be a key influence on other asset classes) is available in the courtesy access to today’s full institutional Market Alert instead of exploring them in this post. We hope you find the access to the full analysis useful.

Thanks for your interest.

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