by Peter Hegarty
The S&P 500 is in a very precarious position and looks set to drop over the coming months. After the Brexit risk rally, where it appeared that central banks would once again step in with yet more stimulus and QE, the S&P 500 broke out to new highs, but since then it has dropped back to the top of its year long range and is acting in a manner that would suggest it is going to fall back through this support.
Technically if we break below 2100 on the SPX we should at least test 2000, and more than likely the bottom of this large range at 1800 over the following months. The recent price action is that of a tired market, a market with no impetus to rise and in addition, sentiment isn’t bearish at these levels for a change, hedge funds in particular are Net long and everyone is expecting the same yearly cycle of a year-end rally after the election.