Technically Speaking Feb 2021

February 2, 2021

Technically speaking:

Long Term resistance: SP500 3850 – 3900 

Long Term Support: SP500 3710 – 3650 Then 3515 


Markets have been very volatile in the month of January. After making new all-time highs we saw a decline of about 4%. Each decline was met with a rally and each high has been met with a decline. I am a believer that the markets can have sharp declines, but they will be short lived for the foreseeable future. We have both monetary and fiscal support for the economy. The biggest difference between now and our last economic downturn in 2008 is this time we have the world working in concert to support and stimulate the world’s economy. It will take some time, but once we get the vaccines to most of the developed countries, I see a lot of pent-up demand. Will buying habits and spending change. Of course, but the reopening industries such as airlines and hospitality should outperform. I also see alternative energy industries and battery makers doing well. Follow and invest in the Biden agenda and reopening industries and you will see the economy do well.  When the economy does well stock prices tend to rise.  Investing is about understanding the political roadmap we are given not just the political agenda we want. As much as Biden wants to rid us of fossil fuels it is a long game. Coal, natural gas, and oil are just not vanishing, but these stocks will be purchased quietly so the investors do not get harassed by the those not in favor of those industries. If electric becomes the main power source of the future, you need to ask yourself how are we going to supply all the electricity needed. The likely answer is coal fueled plants. Going forward the Political landscape will create buying opportunities. The Biden agenda knows the Federal reserve and Federal government are there to support the economy, so they will continually present very costly stimulus plans with NO way to pay for them. Use our technical support levels to buy on declines and as we make new highs be cautious and take some money off the table. At some point the markets will become frightened by all the spending and will recalibrate to a more value-oriented level. Use the next few months to enjoy the ride, but do not be greedy and do not be afraid to buy on big declines. Be smart and know your risk tolerance. 


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