Technically Speaking – February

February 6, 2025

Long Term Resistance: SP500 6120 – 6150

Long Term Support: SP500 5850 -5750 then 5600

As we stated last month, we believe the markets will be volatile and will probably stay this way for a few more months. Volatile markets are frustrating for momentum investors. Investors like markets to move in an up direction and only have small pullbacks, this is not the case and thus has caused some fear in Investors. This has been evident from the 2 to 3% declines the Markets have witnessed in overnight trading, only to be bought causing rallies. Volatility is usually news driven and when Trump has the pulpit, you can expect the Volatility to increase. At least in the short run. Every big idea will be shut down by the left. Every tariff is the end of the world. And every move Trump makes is the end of Democracy and the economy will be destroyed. Don’t believe it. Change will create negativity until the proof of the change is working. So, expect a lot more brash statements and the world of Trump haters telling you all the negatives. To make changes involves big ideas and strong men to push forward.

The markets will react negatively until investors realize there are no details so they will bounce back. Remember, Trump states big ideas for change but in the end, Congress will battle to pass a watered-down version.

I do believe the Markets have a risk of maybe 10 to 15% at some time and from some higher level. So, you reduce risk when it rallies to new technical highs and look for buying opportunities when it falls. During Volatile times investors should dollar cost into positions and not be extremely aggressive until we do see some type of economic slowdown that creates that big selloff. Until then be cautious and be actively increasing and mitigating risk as the Markets ebb and flow.