SPX Levels
November 10, 2020
Yesterday’s ‘afternoon fade’ had the S&P 500 closing below technical resistance at ~3581. A sustained close above ~3581 opens the possibility of a new high to ~3930. The S&P 500 is a market cap weighted index with its highest sector concentration in Tech (25.7%). The SPX still managed a 1.08% gain, but the equal-cap weighted version of the index (RSP) gained +4.16%. It’s clear the US business cycle is expanding and earnings are in recovery mode. At the moment, there’s concern that rising COVID cases and reduced mobility could disrupt the recovery. But with bond yields below 1%, interest rates at 0% and money supply growing at 24.1% annually, it seems more likely the recovery can bridge the gap to late-spring vaccine availability. If rising case counts make it difficult to sustain a break above 3600, we’d expect a setback only to the ~3220 range with ~3400 as near term support. Ultimately, we’d still expect a sustained breakout rally led by cyclical/value sectors.
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