The E-mini S&P 500 has been in a severe downward slide since September’s market meltdown, and despite a bounce on March 10, analysts are skeptical about its chances for a sustained rebound.
“The market has collapsed because of the liabilities that the financial companies took,” says John Welsh, SVP at Peregrine Financial, adding, “last summer nobody believed the severity of it.”
Richard Roscelli, broker at Alaron Las Vegas, says the downward movement is “based on people giving up the ghost in regards to the financial institutions. There’s been spot picking in certain companies and sectors that they know have some sort of tangible means of providing dividends.”
Roscelli says the March 10 rally could push the E-minis to test resistance at 720, and eventually 724. He pegs support around the 668 level.
“There’s a lot people trying to pick bottoms and most of them have been toasted,” Welsh says. While the bottom pickers may be heroes for the day, Welsh says, “[The market is] going sideways. You can have a big rally but when you look at it on a monthly chart, that big rally from today looks like the bottom end of a new trading range.”
Larry Levin, president of Secrets of Traders, expects the E-mini S&Ps to continue to go lower despite the March 10 rebound. “We’ve blown through big support levels, like the 700 level. I’m sure we’ll get back below it again,” he says.
