Is the S&P 500 at Risk of a Near-Term Pullback?
Watching the S&P 500 of late has me at a crossroads. Things are looking strong with the economy and we just signed a new trade deal with Canada that improves the NAFTA agreement we had with our neighbors to the north and south.
However, the technical point of view has me wondering if a pullback is in order.
Riding High in the Channel
Looking at the daily chart above you can see the S&P has been in a nice ascending channel since April. Of this six month trend the last three months has seen price in the upper half of the channel.
Though this means the price trend has been strong, it also means that there is a noticeable downside risk even with price remaining within the ascending channel. As far as 2,850 could be possible if we were to get a sudden move lower in the next week. I don't expect a hard sell off like that to occur, but it is a scenario that I will atleast acknowledge.
Struggling at the Highs?
What I have noticed is the last five straight session the S&P 500 struggled to hold onto its daily gains and sold off the last couple hours before the close.
Along with that movement is the fact that the 2930 level seems to be a spot of resistance as it keep poking through it and then failing to close above it the past week.
We very well could push to new highs, but my gut doesn't like this price action the past week. There are moments to load up on a position and moments to be conservative and right now I believe the risk-reward favors paring positions down to a more conservative level while looking to add on any large pullbacks.
Who knows if it will play out that way though, remember it is all just probabilities in the end!
Always have a good risk-reward scenario - it is the key to investing!
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Not certain the when but am certain on the eventual.
Today is a sell off in and of itself, large move this morning.
This 4th quarter is going to be a time of upsets.
We will see the stock markets have a serious pullback
We will see some bank scares
We will see crypto spike
And we will probably even see gold spike.
But, it is so hard to predict when there will be a stampede for the door.
Some say it is when bitcoin actually has an ETF.
Some say it is when a big bank crashes.
Some say never... but we all know that is just wishful thinking.
My hope is that everyone wakes up, sees how much better cryptos are and ditches their shit for protection chipped CCs for the ease of use of cryptos.
FWIW, I think we're due a pull back. I am looking to take a short signal.
Missed your show today. Where were you? (Hopefully doing something good.)
I was in the air on a plane. My flight got delayed twice so I went from hoping to be home 3 hours before my show to getting home a little over an hour into it.
No, because stocks go up forever. Duhh.
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I have been out of the market mostly because of similar concerns but have been wrong. I think there is potential for an irrational “melt up” past 3,000 before a more exhausting consolidation that could last a couple of months. Then, I cannot see how a correction or full blown bear market does not ensue. 2019 earnings will be to difficult for companies to overcome expectations.
Yes, I can agree with that. My fund partner is betting big on the melt up theory, but I'm not as comfortable with taking on that much risk. Q4 traditional has done well for the stock market though. I will say I'm neutral in the near-term.
Great points, I think the sentiment remains positive at the moment, too positive which is scary, but must respect the trend until the very end.
A pullback to the bottom side of the trend would be welcomed. Getting that a bit with today's move but with unemployment data tomorrow who knows what happens.