My Work Suggests 3600-3500 As Next Key Range

Ah, I'd love to wear a rainbow every day
And tell the world that everything's okay
But I'll try to carry off a little darkness on my back
'Til things are brighter, I'm the Man In Black

-Johnny Cash

The earnings revision cutting cycle that I have been discussing has not only begun but it also continues to grind ahead.  Along with this, fears of economic slowing are also increasing.  These are two major factors that are creating significant headwinds for the equity markets.  Hence, I am still more focused on downside risk and am still targeting 3600-3500 for my next key range and, as my key indicators continue to deteriorate, may have to introduce an even lower area as my final destination for the S&P 500. 

One flagship example of how things are weakening for cyclicals is what just happened to semiconductor company Micron (MU). Last week, I released a note on GICS-L4 sub-industries to avoid and one of the areas highlighted was semi chips. Just as recently as their mid-May investor day, the company was guiding the Street to 7% above consensus on revenue and 10% above on EPS. However, this morning MU’s management negatively preannounced that August quarterly revenue would be 21% below consensus and their EPS a whopping 37% lower than the average Stree...
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