Michael M. Santiago
BTIG said “one more shakeout” by the S&P 500 (SP500) in a certain range would serve as assurance that the benchmark can sustainably hold higher ground.
The benchmark (SP500) has been in a holding pattern following the Fed’s Jackson Hole gathering late last week and ahead of Nvidia’s (NASDAQ:NVDA) Q2 report due late Wednesday, BTIG Chief Market Technician Jonathan Krinsky said Tuesday in a note.
The S&P 500 (SP500) is “working off overbought conditions through time, or by moving sideways. This creates the set-up for range expansion in the back-half of the week,” he said. He pointed out that the S&P 500 (SP500) since hitting 5,608 on Aug. 19 hadn’t moved up much since then. During Tuesday’s session, it was up about 0.3% from that level.
“We would feel better about a sustained move higher if we had one more shakeout back into the 5400-5450 zone,” Krinsky said. And while odds favor an upside consolidation that would mark a new all-time high for the broad index (SP500), “it’s not always that simple,” Krinsky said.
A year ago, for example, Nvidia (NVDA) gapped up after its August earnings release on ‘good earnings,’ then spent the entire day selling off, he said. “The SPX (SP500) did the same, and continued its correction until late October. We could see a similar situation this time around where SPX gaps up above 5700, then fades and comes back in the range.”
The S&P 500 (SP500) hit an all-time closing high of 5,667 in mid-July but relinquished that peak during a rout sparked by recession fears.
Here are some ETFs that track the S&P 500(SP500): (SPY), (VOO), (IVV), (UPRO), and (SDS).
