Why an S&P 500 Drop Is No Surprise
This is a long-term view of the S&P 500 that I have referenced over the course of this year. It's basically a 10 year view of price action by looking at a weekly time frame.
Coming Back to Earth
Looking at the chart you can see all that really has happened this year is that we returned to the upper trendline of this 10 year ascending channel.
It has been my target all along for any short positions I have put on.
Now that we have retraced to it the big question is if we will re-enter it. As you can see from the chart there have been many prior occasions where price has pulled back to it and held before rising again.
Looking a bit Toppy
Looking at that price action this year, it does look toppy to me. The volatility ticking up this year is what has gained my attention. You usually see an up tick in volatility at reversal points. Many people talk about them for bottoms in a market, but it works just the same for tops.
If price enters back into this ascending channel than the 2,400 area becomes a legitimate downside target.
It will be interesting to see what the rest of the year brings and how 2019 starts out.
Published by ScaredyCatGuide
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I wonder how far it will drop though. Personally, I've been expecting a drop. But, is this a real drop yet? Or just a hit of the line before another move upward?
I wish I had stupid money to trade the markets.
This is the top, the shot across the bow was the volatility spike earlier this year, the climb back to highs setting up the major divergences was the big boys getting out...i have been 100% cash since end of Sept and staying there until the 200 day is taken back OR i sense panic and i bounce it for a few days. That’s it.
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Yep, this summer I kept saying I thought SPX would breach the January high by a little to suck everyone in and then WHAM. It took a bit longer than expected, but here we are.
Personally, I think we will fall back into the channel and get down into the 2,400s, but just my opinion. A trade deal with China would rocket the market higher whenever that comes to fruition. May be a while.
Yeah, it should. But with this president, things have been hard to read. The market has seemed to been reacting a bit weird so far.
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Toppy for sure! Earnings will be the hard truth to realize for many companies as tax reform will no longer be of help to many. I think another 10-20% lower if the it is a “soft landing.” Worst if they cannot figure it out...
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Interesting @scaredycatguide.
So it looks like we will only officially enter a bear market once the S&P breaks the lower support of the price channel.