The mid-June equity sell off hit the S&Ps hard, taking out the year’s low and suggesting the index could challenge the lows from October 2005. Fear of a global economic slow down, the newly hawkish Fed and the threat of more rate hikes around the globe are pushing equities down. “Right now we are selling off due to the rate hikes,” says Scott Kebby, a futures broker at Man Financial Inc. “The market is oversold, but it’s not yet time to get aggressively long. Buy strength rather than weakness.”
He notes that weekly support at 1260 has been broken and thinks the market will test the 1201 to 1203 level. If 1201 stays intact, he says he would go long, with an upside expectation of 1266 by mid July, and eventually up to 1280.
Independent trader Art Collins says summer tends to be a trendless, lousy trade but sees potential. “It’s a seasonal thing. It’s the old adage: sell in May and go away.” Collins also notes that during the middle of the month, indexes tend to pull back. For July, he sees support at 1200 and resistance between 1273 to 1279. “The market might have a hard time going up through that level,” he says, but adds we could see a high of 1305 before the end of July.
