Technically Speaking – May

June 2, 2021

Long Term resistance – SP500 4240 -4250 then 4300 

Long Term support- SP500 4150 -4175 then 4050 -4075 then 4000 

Technically speaking the markets are at resistance levels. SP500 is less than 1% from another all-time high. At the current level we are having a rotation of leadership and a consolidation of the recent gains. It would be healthy if the markets would decline about 3% to 5%. This would relieve the stress of buying at these nosebleed altitudes. A decline would allow buyers to re-enter the market comfortably and not have to stress out as the last guy in. Our economy continues to rebound strongly as we open back up, however, the anticipation of this move is already priced in the markets. Speculation in stocks like AMC and GME is a warning flag to those of us that have been around for a while. Just like in 1999 when the dot com phase brought the markets higher, and in 2008 when the real estate market was red hot, the current environment with new younger investors brings out bubble scenarios. I am NOT saying we are setting up for a crash, but the markets will have high volatility. I suggest we buy at the support levels on pullbacks and reduce our risk exposure when we are rising due to speculation and not because of valuations. Technical breakouts are great buying opportunities after a decline. It sets up great looking charts and gives a trader a place to buy and a reasonable area to sell. Do not get caught up with all the hysteria around the meme stocks and crypto currencies. They are fun to play with if you can handle the loss, but it is not the game to get rich. That takes a diverse allocation and a continuous investment plan over a long period of time.  

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