Technically Speaking – July

August 4, 2021

Long Term resistance: SP500 4430 – 4450
Long Term support: SP500 4250 – 4300

Markets have been in a small trading zone. The SP500 found support at 4250 and resistance just over 4400. As we move into August, the markets look tired and have headwinds, but I don’t believe we are vulnerable to a large decline. I do believe a 3 to 5 % pullback can happen over the next three months. If you don’t have some cash, it may not be time to reduce risk assets. DO NOT sell all your positions. That is market timing. We prefer buying on pullbacks and selling on rallies. The Markets will have to deal with some summer Hedge fund selling and over evaluations. Remember, the FED is still inserting $110 billion per month into the bond market and provides funds to support the Markets.

In summary, if the SP500 breaks over 4450, expect a move close to 4500, but if we break SP500 4475, I would expect to retest 4250. Remember, the time from August through October is when the Markets have been vulnerable to declines. Make sure you can buy on a pullback; just don’t expect a big one.