Technically Speaking – April

May 2, 2023

Technically Speaking:

Long Term Resistance: SP500  4200 then 4300

Long Term support: SP500  4000 then 3790

The market has been trading in a wide range over the last few months. SP500 has found support around the 3800 and resistance at about 4200. I don’t think much is going to change. The risk is still to the downside as the corporate earnings start showing signs of declining. The market continues to bounce off declines in the hope the Federal Reserve will announce they are going to stop raising rates. The problem with this is the Fed wants inflation to decline to 2%, well below where it is today. The Fed has been raising rates to slow demand, but it’s not curtailing wage increases which are inflationary. The administration will not help with policies to relieve inflation, in fact they just continue to increase spending which is inflationary.  The market will have a hard time moving higher due to a lack of liquidity as the Fed has gone from Quantitative Easing (QE) to Quantitative Tightening (QT). For stocks to move higher investors need to believe stock valuations are low enough to create value. We have high evaluations and declining earnings with NO stimulus. This environment is not conducive for sustained rallies. Stay invested with core positions, add to risk at lower levels and pair back risk at Long Term resistance. I believe a large trading range will continue until we go to lower levels that make sense for investors to buy and hold for long term gains. That level may be around SP500 3500.