Coolhand's Market Analysis

It is getting to be a familiar place, that precipice. How many times will the S&P 500 walk up to it and turn back?



The weekly chart of the S&P 500 shows that the 1880 area seems to be some key support. It's been tested 6 times since last summer and has turned back up each time. Momentum is negative, but it's trying to turn back up. RSI is stair-stepping lower. Volume has been high since the beginning of the year.

As always, there are reasons to expect this market to bottom and make another run higher. But eventually there will come a time when price falls through support and does not come back (at least not quickly). Boom and bust cycles are part of the market landscape. The bust cycle may be upon us. But are the powers that be ready to let that happen? They don't always have a choice. Sometimes the forces are just too great and the dam bursts forth.

Trying to pinpoint when that happens is largely a guessing game. The key is trying not to get swept away when it does.