The S&P 500 Touched a Seven-Week High

This morning, the Census Bureau reported that retail sales rose 0.1% last month, but if you don’t count gasoline, then retail sales were up 0.4%. Sales were up 2.4% in the last year. Today’s report matched expectations; however, the August number was revised from 0.2% growth to unchanged. Not great, but some improvement.

The VIX rose yesterday after falling for 10-straight sessions. In two weeks, the VIX nearly got cut in half. When I went on Bloomberg a few weeks ago, I said that the VIX was too high given the market’s current behavior. I think I was right on that.

The S&P 500 has fallen back below 2,000 but I don’t expect that to last long. The Dow is currently a hair below 17,000. It’s interesting how the market has zeroed in on this 8.5-to-1 ratio between the Dow and the S&P 500. Seven years ago, during the height of the financial crisis, the Dow was ten times the S&P 500. That was a 40-year high. (To be clear, we’re talking nominal index value not total market cap.)

I’m not a technical analysis guy, but it’s interesting how the S&P 500 has been toying with “resistance levels.” For example, the market’s recent high and low are almost perfectly equidistant from 2,000.

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On August 24, the S&P 500 bounced off 1,867.01. It tested that level again on September 29 when the index reached a low of 1,871.91. The market held and we went on to rally but found new resistance points.

On September 17, the S&P 500 got as high as 2,020.86. This past Friday, we got up to 2,020.13. I don’t think that’s an accident. Yesterday, we pierced the high and got up to 2,022.34. That was a seven-week high, and we’ve slid back ever since.

Posted by on October 14th, 2015 at 11:31 am


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