There has been a lot of chatter that the market will just keep going down. Everyone is expecting it now. The negative side has become the obvious play. When trades become obvious, I think twice.
A close look at the SP500 suggests it can find support between the 1250-to-1270 levels.
Instead, I would rather point out a few interesting observations that may allow for the 1250 area to hold support.
First, the NYSE Composite index is approaching a very strong support. Its 200 SMA has consistently acted as a spring board, and we are very near this levels.
Third, and most important, earnings season will be upon us in July. As earnings caused us to rally in April, they will cause us to rally again as premiums have been completely removed from this market. (Remember, the BRICs are slowing, but they still growing at a very healthy clip that will maintain global GDP growth of +4%.)
The equities markets are very very oversold, and individual names are getting really really interesting. For instance, Google. When they took a hit last quarter I indicated I would wait for the stock to get toward the 500 level w/market negativity before playing it again. Well, here we are. I am looking to play the Dec 2011 500 Calls when GOOG breaches 500. Around 475-500 is a support area.