Technically Speaking – October

November 5, 2024

Long term Resistance: SP500 5800 then 5875-5900

Long Term Support: SP500 5650 – 5700 then 5540 – 5500

S&P 500 has been pulling back from the 10/17 high of 5878. The pullback may be the beginning of a larger move down. A normal retracement of 5 to 7% brings us down to 5580 through 5460 on the S&P. The markets believe the fed will lower the interest rates at least one more time this year and perhaps 2. I am not sure that can happen if the Fed doesn’t want inflation to start ticking higher again. Accelerating inflation has abated but it is still moving higher. We are seeing prices rise, which is not good for the middle class. The oil market and interest market are telling the fed to be cautious about lowering rates. Since the Fed rate cut the 10-year treasury yield has actually risen back over 4% which does not bode well for thinking the fed will lower rates further. If the market is correct and the Fed cuts interest rates again, it could cause a market decline, as investors will be nervous about inflation getting stronger and the economy floundering into Stagflation.  I also believe the markets will react to the election outcome. The Harris plan with free money, a bigger government and more regulations will put fear in investors. If Trump wins, we will probably see more economic growth as the result of reduced regulations. The question is will we be able to grow enough to outpace the growing debt and actually see the debt start getting reduced.  I believe over the next 6 months we will see an increase in market volatility as news flows give investors more reasons to sell or buy. The odds are, even if we get a big rally after the election, we will be lower in the first half of 2025. As we spend more time around the all-time high the market is more vulnerable to news. So, mitigate risk so you can be a buyer if the markets do actually decline in a big way, but if they rally you are still participating albeit to a smaller degree.