Technically Speaking – December

January 4, 2022

Technically Speaking:

Long Term resistance: SP500 4820 then 4885

Long Term support: SP500 4750-4720 then 4550-4500

 

Markets rallied very nicely into the end of the year bringing SP500 4800 into play. The momentum is up, but some of that has to do with seasonal strength. The one thing I know is that as the Fed continues to reduce their bond buying every month, we will see a more Volatile market. We have had a strong rally with few small pullbacks. That is what happens when the Fed and ECB are giving the markets a backstop by offering support. This will come to an end in 2022. The Fed has also stated that they will start to raise interest rates when we reach full employment, a number that is, thus far, arbitrary. We do know we have inflation reaching multi decade highs and we see little relief in sight, especially with the supply chain problems. I am not in the camp that inflation will run away. This is because as the fed pulls back their buying the markets will have less money inflows and the supply chain problems will ease. Earnings will be very important as we fight the Covid variances. I believe the market swings will be quite large. I would be looking to reduce some risk if we get a rally in Q1 of 2022. Increasing interest rates will normally have the greatest negative impact on high growth companies. Prepare your portfolio for high volatility by keeping your risk tolerance allocation and learn how to protect your portfolio. Be a patient buyer on pullbacks and don’t be afraid to take some money off the table on big rallies.

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