S&P 500 Refuses to Break Down: Is a Breakout in the Offing?
Jani Ziedins | May 12, 2023 12:48AM ET
Thursday’s session took the S&P 500 on another wild ride as steep opening losses bounced off those early lows. While the index finished down -0.2%, that was a reasonably robust ending to a day traded as low as -0.7%.
As I’ve been saying for a while, this choppy sideways market is handing these whipsaws out in spades. One day’s up becomes the next day’s down.
But if we zoom the chart out and look at the daily and weekly patterns, the market is trading well with multiple bounces off of 4,050 support.
There have been enough excuses for this market to break down, yet every time the bears try, stocks bounce back in their face. A market that refuses to go down will eventually go up.
It is a worrying sign if the market refuses to rally on good news. Still, the sentiment is overwhelmingly bearish as trader chatter obsesses over inflation, interest rates, tight employment, bank failures, and a looming recession.
There is a popular saying in the market that stocks climb a wall of worry, and the indexes trading near multi-year highs is a classic example of that.
For all the excuses, the market has to go down, it keeps going up. Rather than argue with the market, follow its lead.
Until something changes, keep buying the bounces. It is only a matter of time before we test 4,200 resistance and even poke our heads above this key level.
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