Oppenheimer Asset Management chief market technician Carter Worth says the S&P 500 could be setting up for a temporary period of sideways trading, now that it has closed above the key 1310 level and is heading for 1330.
The S&P Friday finished just above 1310 and ended Monday at 1319. "We're likely to start to do some backing and filling here at the 1330+/- level...allowing stocks to rest," he wrote in a quick note.
Worth said recently he expected the market to make it through the 1310 level on the road to his 1400 target by year-end, but he was surprised by the ease of the move. Worth now has his sights set on 1330, as a place the market could pause.
"Looking back to the '08 period, that's where a lot of supply came into play," he said.
1400 is the midway point between the market's all-time of 1576, set in October 2007, and the 1220 level. 1220 was the 2006 summer low and the 2008 summer low, from where the market broke down when Lehman failed in the fall of 2008. 1220 was also the high in April and November of 2010.
"There's a lot of momentum here so I guess you respect it and wait for it to run its course. It doesn't feel like it's over. A steep uncorrected advance gets resolved by price, or by time, but they're the same effect. It's not whether it goes down or whether it just goes sideways. It's that it just doesn't go up," he said.
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