Technically Speaking – August

September 8, 2023

Technically Speaking:

Long Term Resistance:  SP500  4625- 4650 then 4750 4800

Long Term Support:      SP500   4350-4300 then 4100 then 3600

Markets rallied in the last week of the month after 3 weeks of declines. At the end of August, we were back to the upper resistance which should cause a stall in the late month rally. We are in the month of September which statistically usually is not a great month for stocks, so I don’t look for a rally to new highs. The best scenario is we have a floundering market. The economic numbers continue to show a slowing economy, but the Federal reserve wants to stay vigilant in raising interest rates to combat inflation. My fear is the economy will have a tough time recovering if rates stay high. Mortgage applications are at a 27-year low, credit card debt is at very high levels and savings are declining. This is a recipe for a slowdown at best and a recession at worst. Price earnings valuations are too high. We are at 24x P/E, and the norm is around 16x P/E. The markets would need to decline significantly for stocks to be considered undervalued. Market declines usually start in the August through October time frames and bottom out sometime in October. Use the support area of SP500 4300 for a bounce and under 4000 for longer term time frame. I would remain invested with core holdings and be happy receiving 5% in money market until an opportunity arises.