A Market That Refuses to Go Down Will Eventually Go Up
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The S&P 500 slipped half a percent Tuesday as it continues digesting Friday’s big gains.
While watching the index stack big back-to-back gains is more fun; trading is rarely that easy. But as long as the gains are bigger than the losses, the bulls are still in control.
S&P 500 Daily Chart
The two near-term points to watch are Monday’s highs and Friday’s lows. Breakthrough either of these, and prices will keep going in that direction. On the upside, 4,200 is easily within reach. On the downside, 4k and the 200dma loom large.
Which will it be? The answer you get largely depends on the speaker’s bias. But for those of us without a bias, the market is trading well right now, which can’t be ignored.
Prices bounced twice off 4,050. If this market were as fragile and vulnerable as the critics claim, the selling would have accelerated, not dried up, and bounced.
Minor red days like Tuesday are a normal and healthy part of every move higher. Two steps forward, one step back. Until proven otherwise, we continue giving this market the benefit of the doubt.
