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Sideways for almost 3 months now – Dr. J's Market Thoughts Press "Enter" to skip to content

Sideways for almost 3 months now

The lack of posts hasn’t been for lack of ideas on short term trading, but since this blog is directed at LONG TERM investors, I didn’t feel it was appropriate to boggle your minds with quick moving ideas that might not even be present by the time you read them.  Needless to say, I have been very active in the short term trading market as the current market is moving 1%+ up or down seemingly every day!  Trader’s paradise.  But to an investor with a longer term time horizon, this has been a sideways, but volatile, market.  It seems the immediate danger of the 1987 analog has passed, which means we might be in the Spring of 1987 analog posted earlier.  If you are a member, be sure to log in to see the post from a month or so back regarding those two possible outcomes.  Fall could get interesting in 2018!

Long term, I’ve posted a daily chart of the S&P500 from the ATH (all-time high) in late January through 4/26/18.  I have 5 arrows on this chart and they are all very important:

Purple arrow:  This is the 50-day moving average and price is still below it, however, the 50-day has stopped declining and is neutral right now.  Price getting back above that level would be good sign for the market.  Perhaps we’ll have a resolution to that by the month-end update coming out next Monday night.

Green arrow:  This arrow points where the Wednesday low of this week was.  The market bounced nicely off the 2016-2017 white channel that has been a staple in this blog for years.  It is still containing price here in 2018.  Until price violates this channel, things look good for the long term investor.  There is (rising) 200 day moving average support as well in this area.

Red arrow:  This arrow points to a logical place where price could fall *IF* we lose the 200 day moving average and white channel support of the green arrow.  We’ll cross that bridge *IF* it comes to pass, but so far, so good.  The market has held up nicely considering the big drop experienced in February 2018.

Blue arrow:  This is the top of a descending channel in teal connecting the previous highs of January and March of this year.  If price continues to rise over the next few days or weeks, everyone will be looking at this teal line to see if the market is healthy, or gets rejected.

Yellow arrow:  If we clear the teal channel and blue arrow, the next stop could be the white channel top in the mid-2800’s.  You would definitely want to enjoy the push up to those levels with some participation if you can manage to find a way into the market with some of your investment/trading money.

I hope that helps some of you longer time horizon investors out there with where the market is right now and what some of the places to keep a close eye on the market.