14:22 US TECHS: S&P Outlook; Range Break Already Tired Looking Boston, February 26. SPH finally broke the prison pennant that we have been writing about for weeks and closed above 1370 for the first time since Feb 5. However the follow through thus far has been limited (1375 high) and breadth on Monday was not strong. There is some troubling news out in the overnight press concerning VIES, variable interest entities that allow financials to keep assets like subprime securities off their balance sheets. A bond research firm has suggested that VIES may portend another $88 bln in losses for financials that use them as they are another short-term funded asset class. According to Moody's Investors Service and the Federal Reserve, VIES had $784 billion in commercial paper outstanding as of last week. In French VIE means life - for the banks it may mean death.
SPH needs to close above the top of the pennant that has constrained prices for the past couple of weeks with that line now at 1365. Upside resistance is above at 1370, 1375 and the 50% Fibo 1383.15. Below support is at 1363, 1357 and 1350-1353. A move below the lower pennant boundary (1343) would be negative and a close below 1331-1327 would be fatal, projecting a run for the lows.
Don
