The market seems to be locked in a heated battle around 1050 on the S&P 500. The index has been in a tug-of-war, crossing above or below 1050 in each of the past 5 trading days, which has been very interesting to watch. Last Friday, the bulls seemed to gain the upper hand. The market rallied for most of the day and closed at 1064. However, today, the bears fought back, pushing the market down to close at 1048. These latest gyrations, in a relatively tight range, reflect a high degree of indecision in the market, as investors try to digest the latest economic news, what the Fed might do next, the looming fall period, etc.
We’ve been viewing 1050 as an important price for most of the summer. The market briefly dipped below in late June/early July, but quickly bounced back into what we viewed as a sideways trading range that formed after the April peak. Closing decisively below 1050 in the coming days, in conjunction with the deteriorating economic backdrop, will likely compel us to take further defensive actions in Pinnacle portfolios.