Good day all, It has been an interesting week thus far. This market has swung in excess of 80 SPX points. Let’s put that into perspective for a moment, back in June the low in the SPX was 2691, fast forward to September and we hit all-time highs sending the SPX to 2940. That’s 249 SPX points. Enter October (which we are nearing its end) and the SPX had a high of 2939 and a low of 2691.
Now, one could easily make the argument that we are developing a springboard type of launch to send the market to retest the highs that could indeed be the case. However, it does not bode well for the market that it has consistently closed below the 200-day moving average. This is typically the area where fund managers and the big (smart) money comes in and begins a buying frenzy. It did indeed look like big smart money came in and started the buying today. We saw the SPX swing 60 points today alone! Does this mean the selling is done?
Tough to say, there are a few reasons to believe it is put on pause for the next few days. Given specific price levels, I still express the opinion to sell rallies. Doesn’t mean we won’t get them.
Risk & Reward
Price action always tells the story – for the second day, we have close below 2766. Something to keep a close eye on.