Market Consolidating

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Summary: after the serious downward pressure from the past few weeks, the market now appears to be catching its breath until it decides it's next move. 

​Technical Details: 
As the market moves up and down, technically speaking, there are areas that are referred to as "support" or "resistance".
Support is a price area on a chart where the market seems to find support as it is in the process of a downtrend.  Often these areas align with significant technical indicators such as moving average crossings, previous highs and lows or previous pivot points like 38%, 50% or 61% Fibonacci retracement levels in the chart.  The well-developed practice of technical analysis relies on these areas to determine probabilities of the future path of the market.  

When the market appears to have reached a given support level, it will typically begin to consolidate (move up and down in somewhat of a sideways motion) for a period of days, occasionally weeks until it breaks out to either the downside or upside of this consolidation area, sometimes referred to as a trading channel.  A breakout from this channel is typically signals the direction of the next leg of either an uptrend or downtrend.  Another phenomenon surrounding a breakout event is that the previous support, after being broken to the downside, now becomes the next resistance point when the market eventually tries to rally upwards.  

Currently the market is demonstrating a support/resistance area for the S&P500 at 5340 (+/– 20 points).  This area contains the 20 week moving average as well as some 50% and 61% Fibonacci retracement areas and additional technical indicators too numerous to detail out in this weekly report.  So, only time will tell, which direction the market will move out of this area.  We are continuing to monitor and will take action accordingly.  In the meantime, the market has continued in a pattern of lower lows and lower highs since the all-time high of 5669 on 7/16/2024, which very interestingly was the 161% Fibonacci level of the rally from the low of 4103 of 10/27/2023 that we reported on last week.  The S.T.A.Y.™ strategy went into an inverse position based on these various technical indicators on 7/22/2024 and remains until the algorithms show otherwise.  We will keep you posted.

​Weekly S&P 500 Chart (with all-time hi shown)

​Monthly S&P 500 Chart (with all-time hi shown)