Since the April 12th close below the 50-day simple moving average, we have not had a close back above it. Price was briefly above that level on Thursday of this week, but was rejected back under by the overhead falling trendline from the lower highs that has formed.
How will the market handle the French elections? Similar to BREXIT? All I know at this point is SPY is getting squeezed into a smaller and smaller space between $233 and $236 on the chart. I believe the election is likely to give the market an excuse to break out of this range. Because of how much energy has been built up, the breakout should be worth a good $5 to $7 move in the SPY. If you look back at previous posts, I’ve talked about levels of support below the market, and once we clear the near overhead resistance at $236, it should be a fairly easy push to $237.50 and then $239. Once we pop $240, it is clear blue skies overhead and who knows where this market will stop?!?
As a long term investor, you can’t let large gaps or external events shake you. If you have been making a plan with the help of this blog, stick to it. Raising cash to deploy is planning ahead, so you can use it when the time is right. A drop below $233 means you will need to look for support to put some money to work. A gap above $236 means you likely need to nibble into some positions and keep nibbling as long as price stays above the 50-day moving average on a closing basis because that means there will be areas of support below you again if the French Election results gives the market a turbo boost on the open on Monday.