SPX has been a wild ride... even experienced traders like myself have been getting pushed around, stopped out, and left scratching our heads trying to make sense of this market. It's times like these that it's important to remember that the "why" isn't that relevant to us from a trading perspective. Technical analysis provides unbiased, objective, and most importantly, unemotional analysis that can cut through the headlines and tweets to help us position ourselves for the next move. Of course we may end up on the wrong side, but you have to think in terms of probability. For example, if there's an 80% chance of a decline versus a 20% chance of moving higher, which would you pick?
I also want to note that while most are intent on blasting Trump and the shit with China, that's not what started this mess. If we're being fair, the market is still up over 22% since his election even after the recent selloff. In fact, the catalyst that initiated the selling was actually a labor report that indicated wage inflation was picking up, which in turn may make the Federal Reserve tighten faster than the market expects. The headlines about trade wars and whatnot certainly didn't help, but they were absolutely not what started this move down, so don't be a sheep and believe the "Trump tanks markets" and "Trump doesn't care about investors" headlines... those are designed to sell news, not report facts!
Anyways, rant aside, the current trend is lower, therefore rallies should be sold until there's some indication that the trend has changed. I also want to note that the market has respected the Fib levels damn-near perfectly. As such, I see major resistance at 2663 and support at 2533-2554. Given the price action, I think that support fails and we make a new low. I have downside targets at 2459, 2421, and 2366 for the next leg lower. Whether or not that's the bottom will only be known once we get there and have more data to use.
Finally, I want to say that there are opportunities in a declining market, so don't think its time to sell everything and move to Utah in a bunker. However, if you're portfolio consists of only index funds and the like, I urge you to reconsider carrying such concentration risk and to use this time to rebalance your holdings and pick up some undervalued assets, as its the only way to outperform the market!
Happy trading!
I also want to note that while most are intent on blasting Trump and the shit with China, that's not what started this mess. If we're being fair, the market is still up over 22% since his election even after the recent selloff. In fact, the catalyst that initiated the selling was actually a labor report that indicated wage inflation was picking up, which in turn may make the Federal Reserve tighten faster than the market expects. The headlines about trade wars and whatnot certainly didn't help, but they were absolutely not what started this move down, so don't be a sheep and believe the "Trump tanks markets" and "Trump doesn't care about investors" headlines... those are designed to sell news, not report facts!
Anyways, rant aside, the current trend is lower, therefore rallies should be sold until there's some indication that the trend has changed. I also want to note that the market has respected the Fib levels damn-near perfectly. As such, I see major resistance at 2663 and support at 2533-2554. Given the price action, I think that support fails and we make a new low. I have downside targets at 2459, 2421, and 2366 for the next leg lower. Whether or not that's the bottom will only be known once we get there and have more data to use.
Finally, I want to say that there are opportunities in a declining market, so don't think its time to sell everything and move to Utah in a bunker. However, if you're portfolio consists of only index funds and the like, I urge you to reconsider carrying such concentration risk and to use this time to rebalance your holdings and pick up some undervalued assets, as its the only way to outperform the market!
Happy trading!