S&P 500 - It Sure Was Due for a Pull Back!

in #money5 years ago

About a week ago I did a post that begged the questions - Is the S&P 500 due for a pullback? It was definitely something to consider as the market was struggling with it's recent highs and was still in the high end of the six month uptrend channel it has been in.

Reversion to the Trendline

The target I called out for on the S&P 500 was nothing more than an orderly pullback to come test the bottom of the uptrend around 2,850. The move would have worked out to an 80-100 point drop, which is still substantial, but would have been technically sound and kept price in trend.

Diver Down

We certainly got more than a pullback to the trendline as the market has aggressively sold off the past week and shed nearly 200 points, blasting through the trendline.

As you can see in the chart below, this move is similar to the dump we got in January, though in comparison we haven't sold off as much. If this move were to match January then the next downside target is that June bottom around 2700.

Maybe we get there, maybe we don't but there will likely be some kind of green day mixed in.

Personally, I'm sitting on the sideline until I can get a little more clarity. There was a good short opportunity couple days back I don't see any clear actions at the moment.

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Disclaimer: All info in this post is my opinion and for informational purposes only

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Thanks for this.

Been a nice run for a decade. Two years ago, the writing was on the wall with the initiation of policy normalization. The market run since is not uncommon, and is actually to be expected at the end of any trend. When there is a sense a great party is getting closer to winding down, everyone piles in to get those last licks.

But now, with rates moving back to a sensitivity point (after a decade of investor immunity to downside risk from free money central bank proponomics ), portfolio managers can no longer easily justify equity market valuations.

I think it’s also important to highlight the fact that Fed policy strategy post crisis has created a real disconnect between the financial market economy and real economy - a disconnect that must be reconciled.

Here are some more thoughts re where the MarketPunks team believes this correction could take us in the months ahead. 👊😎

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Interesting post

A lot of technical damage done. I see more downside risk in individual names that have confirmed topping patterns. Agree it's definitely time to be defensive.

Gold bugs will be happy, that's the one sector that's finally catching a bid! I took another look at it here today.

Sweet, yeah gold has been due for a bid for much to long.

Yeah been a dog. These miners can rip when they get going.

Good idea as sometimes these things spiral out of control and the reality that people buying were chasing performance which is never a good idea.

The question is, will the safe haven play be precious metals or crypto, or both, during the next cycle crash to the bottom?

Well early indication is now as BTC dumped yesterday lol. I think it will be quite sometime before we know the answer.

Crypto is an enigma for a while as there are still way too many whales that can cause the market to dump at any given moment if they want to sell.

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