If you were a prankster of a market index and wanted to mess with every investor for fun, you would have behaved last week exactly as the S&P; 500 behaved.
The bulls were getting their party poppers ready a week ago to celebrate crossing over the 1150 line, as they anticipated doing last week. Bears thought the index would hit 1150 and turn down, bulls thought it would hit 1150 and break through. If your job was to frustrate both sides, what would you have done? Probably edge right up to the line, then poke over and under it a little so both sides held their breath, then end right on the line so nobody could sleep all weekend.
That’s just what the S&P; 500 did, and ended the week at — no kidding — 1149.99. If this were a Hollywood movie, we’d be rolling our eyes at the false drama. Look at the march up to the line in these daily closes from last week:
1139 Monday1140 Tuesday1146 Wednesday1150 Thursday1150 Friday
If we have to split hairs (and what choice do we have, given the tiny movements involved), I’d chalk last week up to the bulls. First, the market did go higher, so that’s an obvious one. Second, it did set a new intraday high on Friday at 1153, and new highs are catnip to bullish chartists. Third, a steady drip higher is actually more impressive than a charge higher because it prevents the market from getting overbought and ripe for a retracement.
All of that on the table and understood, everybody has to admit that the same range that’s held the market since last October is still holding it, and that it sits smashed up flat against that ceiling. Just the thickness of the paint remains above, that 0.01 keeping the market closed below the top of the range at 1150.
Here’s a true story. An investor friend asked me on Friday evening Japan time, before US markets opened on Friday morning, what would be the funniest thing that the market could do on Friday. “Move a tad over 1150 so all the bulls buy in for the run higher and the bears all stop out, then fall a tad under 1150 so the bears buy hedges for the plunge lower and the bulls stop out, then settle right at 1150 so both sides get screwed for the weekend.”
You can imagine the smile and shake of the head I enjoyed when viewing Friday’s price chart. Amazing.
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