It’s Almost Time To Buy Stocks
The streets are running read with the blood of the slaughtered. Don’t be one of them. Although things are looking quite bleak, we are technically near a bottom in the S&P 500 (should this technical level hold).
We have to go back to 2014 to see what is looking like solid footing. On October 15th, the S&P 500 traded down to 1,820, only 20 points lower than where we are as of the writing of this article.
Looking at the chart, you can see the hard bounce the index took off this level, which is representing our support as of now.
So we have two possible scenarios here as we approach 1,820.
Either support collapses and we tumble to the mid 1,700’s (representing an additional 5% drop from here and an 18% drop from all time highs) or we find that floor and begin running up. If we do fall, the next support level brings us into bear territory.
But as with previous selloffs, the rebound is quick and sharp. We do feel the floor will be in at 1,820 so going long the index after a confirmed run up (maybe to 1,880) could offer great returns in the short term.
The big “if” in the market right now is oil. Is crude collapsing because of a glut of supply or is demand just that shoddy? If it is indeed a supply side issue, the market will strongly rebound on consumer spending and sentiment… however if it is a demand side problem, indications are we could be in for another global recession… so look out below.
We feel the fundamentals of the economy, although lackluster, are strong enough to avoid catastrophe, so keep your eyes on that 1,820 level. The streets are flowing with blood and this may be the time to get out the mop and soak it up.
Now is not the time to buy or sell… just sit and watch the S&P and pounce accordingly.
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