Technically Speaking – May

June 6, 2022

Technically Speaking:

Long Term Support: SP500 3950-3850

Long Term Resistance: SP500 4190 then 4460 then 4700

The markets have rallied nicely off the support level in the low SP 500 3800’s. We now have a lot of resistance levels in the 4150 to 4200 level. We need to break through 4200 to be able to rise over 4300 to 4400. Over the last decade we have had the FED and ECB pumping money into the system allowing investors to have confidence in buying on all the dips. In fact, every decline was short lived and followed by a new high. Now, without the stimulus money, the markets will have trouble finding the new money to push prices to over valuations. New money will only flow into the markets when investors feel the markets have been oversold and are undervalued. I don’t believe we are undervalued yet. In some instances, we are fairly valued. I do believe we are in a trading market until we see growing sustainable earnings. Until then, the approach we will take is all about risk and reward. When we get oversold, we will look to add to risk and when we rally, we will take some money off the table.  The equation is simple, as interest rates rise money moves from stocks to bonds. When the FED stops adding money then where does the new money comes from to force stocks higher. I believe for the next year or so we will see the money churn. That means money will flow in on sell offs and it will flow out as the markets rally. There will come a time when we will jump back in with both feet, right now is just not that time.


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