The S&P 500 has broken down significantly during the trading session on Friday, wiping out the hammer from the previous session that looks so promising. The market now looks very likely to continue going lower, and as a result the 3200 level will be targeted next. If we break down below that level, then 3100 could be the next target. That being said, we are also in the middle of earnings season so that throws even more volatility into the mix. I think it’s probably best to simply wait for a daily close in order to put money to work, because even though this is a very negative look right now, the reality is that the market is still very much in an uptrend so it’s likely that we will see buyers come in to try to pick up a bit of value sooner or later.
That being said, you should be on the sidelines and not try to jump in and be a bit of a “hero” as that’s a great way to get hurt. Obviously, a lot of people are concerned but the question now isn’t so much as to whether or not the market is able to get bearish, but whether or not something has changed longer term. It probably hasn’t, but there is a bit of a “knock on effect” when you get things like this. The SARS epidemic caused three months of troubles when it comes to the Chinese economy, and I think that is being reflected in this chart as well. I will keep you up-to-date as to what I’m doing but right now I’m on the sidelines.
This article was originally posted on FX Empire
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