After climbing through the 1,390 level, the S&P 500 may go on to test the highs reached in March and May, Michael Riesner and Marc Mueller in Zurich wrote in a report dated yesterday. A drop below 1,325 would indicate a retreat to the early-June low of 1,266. That would be a 9.7 percent slide from yesterday's close of 1,401.35.

Future Moves

Investors should watch the flow of money into so-called defensive stocks, whose earnings are less dependent on economic growth, and cyclicals, which are more tied to the performance of the economy, for signs of future moves in the S&P 500, the analysts said.

"The U.S. market remains in a classic make-or-break situation, where a breakout and a subsequent trend move shouldn't be too far away," they wrote. "Either the market is able to start a new momentum impulse -- and for this we would need to see a rotation on the sector basis, from defensives into financials or cyclicals -- or the S&P 500 will very soon get a breadth problem, when defensives are starting to pull back."

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