S&P500 a leading indicator for a rebound…..or indeed follow-through selling.

The market crash we are seeing globally is of major significance and signals an end of the 2 year rally since the March 2009 lows. The SET and indeed a number of other ASEAN markets will however do better than most during 2H 2011

As an indicator as to a possible technical rebound in the more oversold western markets, we think the S&P500 fits the bill. Trading around the 1200 mark, there is a cluster of support around 1183-1188, with some chance of an overshoot to nearer 1170. A rebound from the low should see the S&P500 bounce 35-45 points quite quickly, back to 1205 at the lower end, and maybe closer to 1240 at the higher end. Depends where the low is put in.

Obviously a failure to hold at the 1170-1180 range will be very bearish for the rest of Q3, and could result in a proper sell-off down to nearer 1130, even 1110-1115.

Tonight will be very important, with follow through selling and a close below 1183 likely to see lower supports hit all the sooner. If it holds and starts to rebound it will not go too far we fear – call it 40 points if lucky.

The S&P 500 futures just hit 1183 and are rebounding as we write – but there seems little appetite just yet, that will have to wait forEurope’s reaction to play out over the next 2-3 hours.

For Thai stocks there is risk of 747 being hit on the SET50, and a breakdown here will be really bearish. If the SET Index falls below 1060 it will also be a pretty bad sign and one that the 1000 mark will be revisited once more.

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