Technically Speaking – July

August 3, 2023

Technically Speaking:

Long Term Resistance:            SP500 4630 then 4800

Long Term support:                 SP500 3800 then 3500

We saw stocks rally during the month of July, continuing the rally from the 2^nd quarter. The S&P 500 broke through its first long-term resistance level of 4500 and has managed to stay above that level. The next resistance level we see is 4800, which would bring the S&P back to its all-time highs. During July, the markets continued to be driven by the magnificent 7 stocks. However, towards the end of the month we saw those stocks begin to cool off. Due to this long rally, the support levels have not changed and remain at 3800, then 3500 at the very lowest. The Fed approved another 25-basis point rate hike, bringing interest rates to a 22-year high. Powell stated that inflation has dropped since the middle of 2022, but still has a long way to go to the Fed’s 2% target. These remarks gave us a feeling there could be another rate hike before the end of the year, which the Fed did say back in June.

Because the Fed is still not happy with how fast inflation is dropping, we remain on the side of caution. We continue to have cash on the sideline and downside protection. We are taking advantage of opportunities in the growth area when they present themselves, but we are not being overly aggressive in buying into growth stocks that have been part of the large increase since the beginning of the year. We are heading into a historically negative time of the year between August through October, so we will be continuing to be alert in finding any opportunities to build positions in good companies.