analysis S&P 500 index next week nov 12-16 2012 Stock Market Today Shares, gold , mortgage rates

analysis S&P 500 index next week nov 12-16 2012 : Wall Street's post-election sell-off may gather steam in the coming weeks as worries mount about the looming "fiscal cliff" and technical weakness suggests a possible correction ahead.

The benchmark Standard & Poor's 500 closed below its 200-day moving average - a measure of the market's long-term trend - on Thursday for the first time in five months, and ended below it again on Friday. More than half of the Dow components are trading below key technical levels.

"I don't think you have to panic here, but I think you really want to be looking for the market to move lower for the next couple of months, think the next rally is the rally you want to sell."

At the heart of the market's worry is whether US leaders can come to agreement on some USD 600 billion in spending cuts and tax increases that are due to kick in early next year. Some fear dramatic cutbacks could send the US economy into another recession.

The prospect of higher tax rates in 2013 is driving investors to sell shares as they seek to decrease the tax impact from their positions this year and next.

The S&P 500 has been trading in a range between the 50-day moving average of 1,433.50 and the 200-day moving average of 1,380.98 for about two weeks. A significant break below that lower level could be a precursor to further weakness.

The 1400 level should now be very resistive as it once was massive support. Because of this, we think that easier trade is definitely to the downside rather than up. A break of the bottom of the candle from the week would have us selling the S&P 500 Index futures for a move down to 1300. As for buying, we would have to break the top of the candle from this past week, as well as the little bit of resistance we see just above at 1450

The primary driver of stock prices in coming weeks looks likely to be investor concern about the US fiscal situation. In a sign of the risks involved, comments by President Barack Obama on Friday about the upcoming negotiations caused stocks to sharply cut their gains.

The president, who defeated Republican candidate Mitt Romney in Tuesday's U.S. election, outlined a position for the fiscal issues on Friday that is far apart from that of his political opponents, suggesting a long battle is to come.

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