Technically Speaking – June

June 5, 2023

Technically Speaking:

Long Term Resistance:    SP500 4300 then 4500

Long Term Support:         SP500 3800 then 3500

The common theme throughout this year has been big tech carrying the markets higher. If you look at the equally weighted S&P index, the overall market is down 1% for the year. This shows how a small group of companies are doing the heavy lifting in moving the S&P higher. The S&P has recently found support around the 3800 level, and resistance around the 4300 level. The market has continued to be driven by the debt ceiling negotiations and interest rates.  The market has moved noticeably higher over the past few days on news the debt ceiling bill has passed both the House and Senate. There have been talks to pause rate hikes, but the Fed is still set on getting inflation back down to 2%, so we could see more rate hikes in the future. The recent rally has taken the price earnings ratio (PE) on the S&P 500 to a level that is 50% above historic norms, suggesting a decline to more reasonable valuations is likely.  There is a real bubble that has formed around anything related to AI. It is prudent to stay invested with your core holdings and wait for an opportunity to deploy more. As stocks pull back to levels more in line with their valuation, the opportunity to add good companies for long-term holdings will grow.