Technically Speaking – September

October 4, 2021

Long Term resistance: 4550 – 4600
Long Term support: 4260-4150

Markets have finally fallen after 7 months of making gains. September kept its reputation as the worst month for equity markets of the year. We have seen breaks of support levels and aggressive selling. We had a few 2day bounces, and each time it was sold again at a lower high, then followed by a lower low. In other words, every bounce had stalled before we rallied past the last peak, and each decline has gone lower than the previous low.
As we approach October, we have developed down-trending channels, which is telling us we have not hit bottom yet. With the politically chaotic background and both sides not agreeing on anything, there is a possibility the 1.3 trillion-dollar infrastructure bill may not get done. Progressives want it tied to another 3.5 trillion and thus the fight. The markets were counting on the smaller infrastructure bill to help continue growing the economy. Without it, the markets feel the growth will slow and, in turn, slow earnings.
My guess is the economy isn’t going to stall either way. As people go back to work, the spending will pick up. My best guess is that a 7% to 10% decline from the highs of SP500 4545 brings a good buying opportunity somewhere around 4250 to 4100. History tells us to look for about the middle of October for a bottom. Once we start seeing a series of higher highs and higher lows, we will be more aggressive in buying the declines. Right now, use a dollar-cost averaging approach to purchase and be cautious in your approach.