No Resolve On S&P 500 Index Direction …Yet

By Jim Donnelly, Olson Global Markets

Although key “neckline” resistance on the S&P 500 Index (SPX) at the 1,275 level failed to hold equity buyers back, a sharp move above it was followed by an equally sharp rejection below it leaving the S&P 500 without a clear resolve on its direction or trend tendency.

Earnings announcements have been better-than-expected, with some estimates for full year of 2011 being anticipated to post record numbers in the $94-to-$100 range.  Corresponding economic reports have also scored more favorable outcomes than had previously been hoped for suggesting that Q4 GDP might result in readings coming in the 2.8%-to-3.1% range from earlier estimates of 2.5%.

Continued dismay over the debt crisis in Europe along with trepidation over the outcome of the 12-member super committee’s efforts to reduce debt obligations here in the U.S. have investors lower their “risk” profile, despite a wide array of improving domestic numbers.

From a technical point-of-view, the S&P 500 index (SPX) needs to break well above the 1,275-to-1,293 range in order to breakout of its recent pattern of fits-and-starts and wide day-to-day price swings.  The absence of such a breakout, however, could send the S&P 500 index (SPX) back down on a path that could potentially retest it recent low of 1,074.

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