S&P 500: A Half-Full Market Or Is It Now Half-Empty?
Jani Ziedins | Dec 19, 2021 12:31AM ET
On Friday the S&P 500 tested and bounced off of 4,600 support for the second time in a week.
Between the exploding number of breakthrough Omicron cases and the Fed accelerating taper and rate hikes plans, it was a busy week for financial newsrooms. But for as dire as the headlines seemed, the market was surprisingly resilient and remains steady near all-time highs.
Sure, the index finished the week down nearly 2%. But last Friday was an all-time closing high and having traded through 2013’s Taper Tantrum, the market “only” falling 2% after the Fed penciled in three rate hikes next year is actually quite impressive.
If this market was truly overbought and fragile, these headlines could have knocked us down 5% or more in the blink of an eye. The fact it took five whole days to shed a measly two percent is fairly impressive.
The counterpoint to the above half-full argument is the index is hovering just above recent lows. Fall a little further and that violation of support could unleash a big wave of stop-loss driven selling.
So, the question is if we should be focused on the half-full side of the market or the half-empty?
Well, surprisingly enough, the answer is pretty easy. Above 4,600 is half-full territory and anything under 4,600 puts us in the half-empty side of the glass. Trade accordingly.
While I’m giving the S&P 500 the benefit of the doubt, TSLA’s violation of $1k support this week puts the stock on my naughty list.
I still like this company and stock, but I’m a trader and that means I sell things that are going down. I’m happy to buy this when it bounces, but until it gets back above $1k, I don’t have any interest. And in fact, I actually hope it falls back to $800 support because that gives me even more opportunity to profit from the rebound.
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