Technical Analysis: S&P500 Trendline Broken To Downside

By Edward Harrison On May 23, 2011

This note from Andy Lees shows a potentially bearish trend developing in the US stock market, with the S&P500 breaking down below it’s long-term trendline since the federal Reserve started its second campaign of quantitative easing.

The S&P future has broken the trend line since last September, 9 months ago when Bernanke first started enticing us with the prospects of QE2. Between the start of the rally and the peak the S&P future rallied 32% although is off about 4 1/2% from that high. The future is sitting on its 100 day moving average and 1300 may also act as support, but otherwise there is not much support until 1250 (lows Jan & Mar 2008 & Mar this year), and even that is very marginal.

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Edward Harrison is a senior Editor at Bloomberg. He is also the founder of Credit Writedowns newsletter, a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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