The closely watched US S&P500 continues to struggle on the upside whenever it tests the overhead resistance line illustrated below, another attempt in March is likely to see MM reduce our market exposure in line with our volatile outlook for 2021. The S&P500 is made up of ~25% big tech which has struggled noticeably as bond yields accelerate higher. We know from the Bank of America Fund Mangers Survey that the consensus view for 2021 was rising bond yields but the nature of the acceleration higher has clearly made investors very uncomfortable e.g. Australian 10-year bonds have more than doubled already this year and its only the start of March!
Our preferred scenario at this stage is March will follow in the footsteps of the last 2-months and rally for a few weeks before again encountering a wall of selling. A “choppy” trading range between 3650 & 4000 would be my gest guess for the coming months.
