Technical Analysis – The S&P 500 Gained Only 0.18 Percent In The Last 3 Months Ended May 11, 2012 As Jobs Data Weakened:
Is It Time To Get In Or Remain On The Sidelines? Technical Analysis May 13, 2012: A New Bear Market?
Price action can help investors gauge the likelihood the market is discounting future events or adding a premium to the outlook on equity valuations. U.S. equities fell sharply in the last two months after jobs data from March 2012 came in weak at 120,000 new jobs added. The negative trends were confirmed when April 2012 levels came in lackluster at 115,000. May 2012 initial jobless claims have been marginal on average and don’t suggest expansion much different than at the current rate.
Stocks have reacted to the economic data by moving downward after what started as a correction came close to making a comeback, muddled along for a couple of weeks. The S&P 500 showed a peak was clear around April 6 when the March 2012 jobs number was released and the follow through was to the downside. Thoughts of a new “bear market” have been largely ignored as investors sit back and look for new entry points.
The JP Morgan Effect 2012
Small cap stocks have slacked along with financials, especially after the new revelations from JP Morgan that the company lost $2 billion in 6 weeks. Although it’s only a small portion of the bank’s yearly earnings, it doesn’t take much for a cascading effect to occur in an industry that insures other people’s money.
Monitoring financials, tech and the S&P 500 in the past few weeks, we’ve seen a lack of support for some recent prices. Dodd-Frank and Volcker rule concerns may have a short-term negative impact on investor sentiment related to banks which could spread to other industries and usher in a hesitant investing environment.
The EU Is Getting Worse
The European Union just downgraded its 17 member nations and added more negative sentiment to an already dull market. Unemployment is expected to rise by 10 percent in the region.
The S&P 500 has lost much of the gains year to date and has about zero growth in the last 3 months.
- S&P 500 Year To Date +6.36 percent.
- S&P 500 Last 3 Months +0.18 percent.