sp 500

You all know I trade with a very keen eye on the technicals, “coupled” with an “extremely keen eye” for the fundamentals.

I think we can all agree……the fundamental picture is clear. The bubble has been popped ( as foreseen many MANY months ago ) and the “recovery” will be an arduous journey spanning months ‘n months “if not years” if we consider the sociological and even cultural impact.

Do you honestly think things will simply “get back to normal”? Do you really think you’ll be shaking strangers hands / interacting in society “as per usual” in coming days / months? If ever?

Perhaps you’ve already second guessed your “humanitarianism” walking by a stranger in a mask? Or if I dare suggest…”someone from China”??? ( oooooooooooh ) = ridiculous. He he he….caught you. Shame on you really. Shame on us.

You don’t even exchange eye contact…and god forbid you actually “touch”.

You think you’re gonna get all “warm ‘n snuggly” a few months from now? Common…….yet expectations are that the ENTIRE WORLD just gets back to “normal”? Please.

Technically – here is a look at what a “typical” next wave down would look like, considering the severity:

Next Wave Down – One Scenario To Consider

Take it for what it is. We COULD rally a touch further, as its impossible to nail it exactly but..

If you don’t have a plan ( whether it is the right plan or not ) you stand zero chance of effectively trading this.

“Hopium is not a plan”.

I harken back to posts some weeks ago – suggesting that “however bumpy”, equity markets would indeed take another shot at the highs.

So here we are. A quick look at both the weekly as well daily chart of the SP 500:

After essentially 8 weeks “straight up”, this massive V Shaped recovery from one of the worst market corrections in years will now complete – bringing about the obvious question of “where to next”?

Well.

If you envision much “higher highs” in the current market environment then…….I surely wish you the best. We can see that the big boys like Apple and Facebook have not come anywhere “even close” to their previous highs…so the market correction / re adjustment of value has clearly taken hold in these.

Remember the stat some weeks ago that valuations where ( at that time ) some 74% above the mean? Suggesting that things needed to “cool off” ohhhh….just a tad?

Guidance from nearly every sector ( this coming from the industry leaders ) all suggest lower expectations for sales / growth moving forward. This is “them” telling “you” so…….not too often that actually happens.

Couple this with some very large “selling on strength numbers” over the past few weeks, again suggesting that the big boy institutions are indeed “off loading” quietly in the background while retail thinks they’ve got this licked.

How about a complete and total “retest” of the previous low of January 1st? Bet that’s gonna hurt eh?

Another 2 week fall straight down to the lows…..and another 2 months “grind” back to ( or most likely lower ) than today?

Fact of the matter is…..market dynamics have changed, the big run has ended, the sideways grind / sell off to retail at the top has clearly begun – and one just has to come to terms with it.

This could literally move side ways for months / never reach “higher highs” / grind you to pieces if you don’t keep tucking away profits and reducing your exposure.

Remember the suggesting to buy gold / silver / oil?

This is a “defensive move” and has clearly been performing wonderful. These “turns of the ship” take time while the big boys unwind all their high flyers, all the while loading up on defensive plays at the same time.

Sell on days with big fat green candles ( cuz you should have bought that stock when it was red! )!

Good luck everyone……stay safe the key.