Considering the equity markets have not only found traction over the past two weeks but took out the May closing high in yesterday's session, we updated the series to provided further perspective of how the market has reacted with the Meridian in the past - both the rejections (1987,1994,2011) and the breakouts (1995,2013).
"Two possibilities given the interest rate backdrop and equity market structure, should the SPX fail at finding traction for a third time since making all time highs at the end of May. Certainly, we would consider the scale of the 1994 equity market cascade the more likely outcome. With that said, long-term support from the Meridian is now found ~ 1560 which was initially tested and held in June." Meridian Market Update 7/3/13
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Whether it was Bernanke's primary intention or not, talk of the taper in May deflated animal spirits and took what we perceived to be an unhealthy market trajectory off trend.
Although the spike in interest rates echos of 94', the equity markets have so far absorbed the credit shock in stride with just a mild correction. Moreover, when it comes to the markets dynamics with the Meridian, the rejection in 2011 and eventual breakout this year is akin to the stretch between 1994-1995.
Similar to the 95' breakout, the banks have led the charge higher in the equity markets through their respective long-term resistance.