Aug. 7 (Bloomberg) -- The Standard & Poor’s 500 Index may fall as much as 8.7 percent after the gauge climbed to the upper limit of a trend known as a rising channel, according to a technical analyst at ING Groep NV.
The S&P 500 will decline to a support level of 1,540 after it advanced to 1,709.67 on Aug. 2, Roelof-Jan van den Akker said in a telephone interview from Amsterdam. He drew a rising channel on a graph of weekly prices for the U.S. equity benchmark and identified the support level by looking back at the index’s previous peaks in 2001 and 2007. The S&P 500 will rebound following the decline.
“Prices have approached the upper end of the longer-term rising-trend channel around 1,710,” Van den Akker said. “The S&P has had fantastic gains in the past few months and now it’s too stretched and ready for just a normal correction. I believe when the S&P is falling then other markets will follow,”
The S&P 500 rose 20 percent from the start of 2013 through Aug. 2. The equity benchmark slid 0.6 percent to 1,686.74 at 11:43 a.m. in New York.
In technical analysis, investors and analysts study graphs to predict changes in a security, commodity, currency or index.
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