The S&P just finished 6 consecutive up quarters. That’s the most consecutive up quarters in 14 years. It’s also been trading within a relatively narrow channel for the last 10 quarters, and every time it gets near the top of that channel, it pulls back pretty sharply. For most of this year, it’s been floating in the middle. But it’s approached the top of the channel recently. Near term, the top of that channel is 2,000. (It’s moving at about 25 pts/qtr) And now we’re into another earnings season. Barring any significant earnings surprises, and big world events, I expect that if it hits 2000 in the next couple weeks, it could fall back 100-150 pts pretty quickly. If it doesn’t, it could float in the 1975-1925 range (or slightly lower) for much of the next quarter without a significant pull back, much as it floated mid-channel around 1850 from mid-Feb to mid-May.
All that said, I’m nervous about earnings. I bought a Dec S&P put 6 mos out 10% below current strike as insurance for my long stuff.
I was up on the S&P by a point the 1st half of the year, which was disappointing. I’d love to blame it on having regular work to do the 1st 3 months of the year and not trading near as much, but I can’t. 1st quarter killed, 2nd quarter was almost exactly flat.
