S&P 500: Breakout or Breakdown?

April 1st, 2013

by Chris Kimble

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Investors around the world are sitting on the edges of their seats, wondering if the S&P 500 will breakout or is making a giant 13-year triple top. Where should one look for answers or clues to the next big move in the broad markets?

The 4-pack below reflects key resistance for both the S&P 500 and Wilshire 5000. They find themselves right now at (1) in the two lower charts. The answer to next big move could well come from the Australian Dollar and Crude Oil!

As you can see the S&P 500 and the Wilshire 5000 have a high degree of correlation over the past 15 years with Crude Oil and the Australian Dollar. Right now Crude Oil and the AU$ are nearing the end of their multi-year flag patterns at (2), with key U.S. broad market indexes at important resistance levels at (1).

Where will these key broad markets head in the near future? FOLLOW ME could be the answer to this important question. A "Tip-off" to the next important move in the broad markets could well come from the breakout/breakdown of Crude Oil and the Australian Dollar!

When it comes to Portfolio construction, the move coming out of the flag patterns in Crude oil and the Australian dollar offer important clues to investors and financial professionals regarding a more toward, or away from, risk assets!



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