Here’s My Blueprint for Stocks This Week
Stocks held their 50-DMA as expected last week. As I write this Monday morning, they are bouncing hard.
However, this doesn’t mean we’re out of the woods by any means. The technical damage from last week’s sell offs was significant. We’ve broken below support (green line). And the bulls have failed to mount any significant energy to get stocks back into an uptrend.
What does this mean?
That we’re likely to see more chopping/sideways action for some time. The S&P 500 has had two such periods since the March bottom. I’ve highlighted them in blue rectangles in the chart below.
In terms of price, I wouldn’t expect stocks to break down a lot lower than where they are… but similarly, I wouldn’t expect us to see a sustained rally either. Instead, we’re like to see a lot of ups and downs for the next few weeks into October.
Editor, Money & Crisis