Technically Speaking – June

July 7, 2022

Long Term Resistance: SP500 3925 then 4150 then 4350

Long Term Support: SP500 3750 then 3600 then 3400

It turns out June was not a passive month. While June is normally a positive month, it sadly decided to help the S&P 500 see its worst first 6 months in 52 years.  The support levels continued to break lower which in turn brought in sellers of all kinds to drive the markets even lower. As we sit with an S&P 500 decline over 20% the question is, will we hold support now or go lower. In my opinion we are close to support which means reward is starting to outweigh risk. Risk is still there, and we can fall to S&P 3400 or even 3000 as many pundits predict. However, it is my experience that the “herd” is often wrong. Yes, we have inflation, and we have the Federal Reserve raising rates to slow that inflation and the economy. This is not a surprise, but I see positive surprises going forward. We know we will see an economic slowdown, but investors are not accounting for China reopening which will get the world’s second largest economy rolling again.  Investors are not prepared for a settlement of the Russian/Ukrainian War and certainly are not prepared for the Fed to say inflation is abating which will allow rising interest rates to slow. All these scenarios are going to happen at some point and the Markets will take off leaving all those in Cash behind. Quality stocks work overtime so use these lower levels to add to quality and have patience. I do believe we can have a nice rally into the end of the year that could begin when we hear good news. Look for a 10% to 15% rally and then we can reevaluate if the rally has legs or if we should add protection. In summary, adding to positions or just buying the indexes between S&P 500 3600 and 3800 should be rewarding for a move to S&P 500 4200 to 4400. It’s hard to step up to the plate when all you hear and read is negative but in reality, over the last 150 years buying when you’re scared has been fruitful.



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