Dead Cat Bounce?

This week looks like there may be a little short-term relief from the bears. No guarantees, of course, but the technical set-up suggests there could be a small recovery rally on the SPX as it looks to recover towards the 4170/4207 range. This would be a move of more than four percent – certainly welcome after all the selling of the past month.

It’s too early to tell if this is the base of the move downward (aka buy the dip). In fact, just because the technical setup suggests there may be a brief recovery from here does not mean it will materialize. It simply means the patterns underpinning things suggest it. Markets can still do what they’ll do. And there are plenty of variables that are difficult to factor into this thing.

If there is a good sign out there, it’s that a lot of folks are beginning to suggest the end of the world – or some variant along those lines: S&P 500 falling to 3000 or something like that. Sure, anything’s possible – but is it probable?

When sentiment starts to get to extremes that’s usually a good sign the markets are looking for at least a short-term turnaround. Fundamentally, things actually look better from a pricing perspective than they have in a awhile. PE ratios are much closer to ‘normal’ than we’ve seen in a long time. The real question is, will we see a pull back in earnings or a shift in other variables that will make it even harder on stocks?

It’s possible. But for now, when looking at all the different asset classes out there, stocks look interesting (IMO). Commodities may inflate, but they tend to get hurt in recessions. Real estate already has the headwinds of higher rates. And bonds are contending with higher rates too. That doesn’t leave too many options (outside of cash or derivatives, which both have their dangers as well).

So we’ll continue to watch things unfold. For the week, first-level SPX support looks to be around the 4000 mark. More specifically, the lows last week of 3930/3858 are going to be critical. We break through those, there is probably more pain in store. We hold those support levels, and the 4200-ish bounce looks a lot more probable.

Stay tuned!

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Still Ugly

Difficult to tell where the bottom is on this market. While it’s already over-sold by many measures, the bears still seem to be in charge. This also appears to be more than a mechanical flushing-out of leverage. With the cost of capital on the rise, the markets seem to be (rather violently) re-evaluating the value of equities.

The new rules of valuation aren’t yet clear. What is or isn’t priced into this market isn’t clear either. Sentiment is pretty negative, but there are still some technical lines in the sand that haven’t been breached.

In some respects, it’s difficult to see how some of the largest and most influential tech stocks in the world can lose over half of their value. Then again, there are those out there suggesting they should fall 50% further before their values make sense.

This market is fickle. It’s possible we’re in for a longer bear cycle this time around. The Fed has a difficult job ahead. The question is, how quickly does the market price in news these days? When Covid shut down the economy, it took about three or four weeks to figure it out. Today? We shall see.

For the week, look for more volatility. The technicals are pretty rough. Either a footing is found here and we see a rebound toward 4300 or so on the SPX, or we could see support completely fail and head towards the high 3700’s (very extreme on that one, and probably not achieved in a single week).

No odds calculated this time. We’re in no man’s land. At some point capitulation happens. We’re closer this week than last week. But right now, it’s a guess. If you get it right, it’s glory. If you get it wrong, it’s a market. Hang in there. This too shall pass…

Disclosure: this isn’t advice, and this info changes all the time, so take it with a grain of salt; use at your own risk; all that stuff.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Bloodletting

April was an ugly month for investors — and advisors. You’re seeing headlines like ‘worst performance of the S&P 500 since WW2’ in the headlines.

Armchair quarterbacking is pretty useless. Suffice it to say, many investors are playing the “I knew I should have” game right now. All the signs were there, right? Inflation; the percentage of stocks falling inside the indexes was rising; 10-year treasury yield rising; inverted yield curve; commodity prices; Fed rate hikes; a war in Ukraine; Chinese lockdowns. IT’S SO OBVIOUS.

The reality is, in hindsight, everyone can be a genius. The question is, how’s your foresight? Because that’s what it’s going to take now. Markets have fallen into correction territory.

The BigFoot Market Macro officially kicked out at the end of the month. Historically this has been a risk-off indicator. However, both the economic macro and the credit macro remain in. So what does one make of it? Risk on or risk off?

Taking a position on the markets is easy. Getting it right is the tricky part. How does one predict the future?

The short answer – you don’t. It’s just statistical analysis and theories. Even the best analysts don’t bat 1000. So bury the idea you’ll get this perfect, and switch to the idea you’re just trying to get more right than wrong.

Looking forward, it’s tricky. There’s still a lot of ugly in the numbers. But a lot is also priced in at this point. Most all of the FANG stocks are now in correction or bear territory. Stocks are down. Rates are rising. Foreclosures are rising. In short: uncertainty is high.

The good news is valuations are a lot better than they were a few months ago. So, relatively speaking, stocks are not nearly as expensive as they were.

This is not to suggest it’s time to catch a falling knife. It is to suggest stock prices bottom when investor sentiment is negative. And certainly sentiment is negative at this point.

Looking at the technical stuff, the negative tends are both obvious and strong. However, there has already been a sharp downturn. And if there’s one thing this market has taught us in the past few years of Covid, it’s that trends can whipsaw pretty hard pretty fast.

At this point the VIX is expensive. And recently, the SPX has been inversely correlated with high VIX prices. Translation: when the VIX gets really high the SPX has rallied as the VIX falls. We’ll see if this trend continues. The price to watch is about VIX 34.

Looking past the VIX, the support level for the week appears to be 4050 for the SPX. It’s entirely possible this thing reverses this week before getting that low though. Futures are down, but not convincingly. All it would take is a bid in big tech to turn things around fast. And both AMZN and GOOGL should see share splits soon. So keep your eyes open.

For this week, look for continued downward pressure early, but it’s possible we see capitulation in the indexes soon. Sentiment is quite negative. If the Fed maintains its current language without increasing hawkishness, it’s possible the market has a small relief rally and moves back toward the broad trading range we’ve been in for most of 2022.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

2 Steps Forward, 2.1 Steps Back

While the trend has been largely sideways for several months, the underlying indicators are hinting that things are getting worse. Each time the market makes a run, it seems to pull back just a little bit farther.

If you missed last week’s forum call, consider downloading are watching the recording. There was a lot of economic data to parse. The summary is simple: in the short term, this isn’t a very investable market. The data is getting pulled in both directions.

Five years from now? Probably a different story. Five months from now? Who knows?

If you’re trading this market, look for extremes. For example, the VIX, at least recently, has been a decent predictor. If it gets too low, the bears show up. If it gets too high, the bulls show up.

For this week, it’s holiday shortened and the VIX is pretty low. Not a good combo for the bulls…

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Rate Decision This Week

While markets continue to fight the steeper and steeper battle of inflation, eyes shift toward the FOMC this and Chairman Powell on Wednesday. Markets are expecting a 50 bp rate hike according to Bloomberg. And let’s be honest – calling what Americans are seeing with their own eyes inflation is almost inflammatory right now. ALL of the stuff people see — food, energy, housing, and vehicle prices — which basically make up the majority of consumption for most households — ALL of it has spiked in price.

The war in Ukraine, while a human tragedy, seems more a distraction and divider politically than the driver of all of this. It was well underway more than a few weeks ago. The ramifications of the massive spending are here. Now what?

Markets, being the leading indicators that they are, have given up significant value. Last week they failed to find traction and continued to decline.

A case can be made that this market is already in bear territory. Nearly 75 percent of the constituents in the S&P 500 are off more than 10% from their highs. Over 60% are off more than 15 percent. And over 40 percent are off more than the typical 20 percent measure for a bear market. But these numbers don’t consider the fact inflation is running close to 8 percent (published). When considering inflation as part of the loss, the major indexes are all in bear territory already.

The question is whether or not more downside is in the works. The 50-day moving average will likely cross below the 200-day moving average this week. This ‘death cross’ isn’t viewed favorably by the markets.

We haven’t seen this condition since the start of the pandemic. It was short-lived then, as that was just the beginning of a bigger money-printing push. But this time we’re staring into the face of (hyper?) inflation. The money has already been printed. What it paid for? Debatable.

Government isn’t one to admit it was wrong. It’s bad for reelections. So instead it’s typically just spin. In this case, the financial ramifications of a clumsy and political response that valued narrow medical data over more comprehensive data that included the economic impact of the decisions is coming back to reality. Printing money has consequences. This is it.

So expect rates to go up. Expect inflation, for the short-term, to continue to increase. We’ll spare the ‘why’ section that unpacks the political science and stick to the stuff market participants care about. Keep an eye on the February 24 lows. If the market, even intra-day, drops below the intra-day low of February, the probability of a test of the 4000 level on the S&P 500 goes up dramatically. A close below 4155.77 for the SPX would be a very negative sign. An intraday move below4114.65 is an almost sure-fire bet this market goes lower.

Basically, if the market dips below that February level, confidence is likely to crater and a probable test of 3900 on the index emerges. At that point, it’s a full-blow academically defined bear market — no need for the slight-of-hand interpretation that considers inflation. We’ll just be there.

Keep an eye on the biggest players in the index. If they start to fall, it will likely drag down the entire index in a hurry. So the AAPL, GOOGL, MSFT, TSLA’s of the world that represent huge buoys to the index when they hold their value could also represent a huge anchors if they don’t.

For the week, the futures bias is ever so slightly positive. But with all the geopolitical risks out there, that doesn’t mean much. Trying to call a direction for this market has been extremely difficult. VIX pricing suggests a slightly higher probability for a positive outcome this week. But did we mention all the wild cards? Flip a coin, cross your fingers, or just hope for the best. This week is probably the tell for the markets. Either the line holds, or the probability of a bear jumps significantly.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Small Foothold

Despite all the doom and gloom of the news cycle, the equity markets may be establishing a small foothold. The low on 2/24/22 may have put in place a line in the sand.

While there is still a lot of data to consider, the steepening yield curve and shrinking futures volatility suggests there may be some short-to-intermediate-term relief coming.

While a major move higher doesn’t seem to be shaping up, it’s possible the SPX pushes to test the 4425 level this week. If so, that’s a rise of over two percent. Interestingly enough, there’s an outside chance for a test of the 4500 level on the index. If that were to occur, we’re looking at closer to a four percent move.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Conflicting Signals

The Russian invasion of Ukraine has created a mess on so many levels. War is never pretty. Whatever history calls it – be it war, an invasion, incursion, or some other yet-determined term – the Russian actions against Ukraine look a lot like war. People are certainly being affected like its war. So, for all intents and purposes, it’s war.

Putting aside most of the human aspects of this (which, admittedly, shouldn’t be something we do), the markets have also been affected by this. What started out as a seemingly detached event has proven to have much deeper ties to the global financial system.

Russia, as a major oil supplier, is being slapped with all kinds of sanctions by a large portion of the world’s governments. While it may not be bullets and bombs, the actions are serious. If Russia is ex-communicated from the global financial system the knock-on affects are difficult to determine.

Energy – and more specifically, oil prices – may go much higher. Stocks? Who knows? The Fed was already on a rate tightening campaign, with markets looking for somewhere between 6 and 7 rate hikes for the year. This invasion makes the future a lot murkier.

Since markets really hate murky, it makes for heightened volatility, and the opportunity for bears to experience some self-fulfilling prophecy. The retail marketplace seems very pessimistic about the markets at this point. While that may be a good sign, it is still a consideration in the overall sentiment of the markets.

Over the weekend S&P 500 futures once again showed wild swings, at one point suggesting the markets may fall as much as 2.5% lower this week. Presently the markets are set to open down about 1.25%.

A look at the BigFoot database shows the percent long below 40%. Both the SPX and NASDAQ have sell signals; the DJIA has a wait signal. That’s a lot of risk-off indication right there.

Of course, things typically get pretty bad before they get better. Still, there is little indication the uncertainty is abating yet. So it’s difficult to see a case where the market has priced in all this uncertainty. So volatility will likely persist for the upcoming week as the markets seek more clarity.

Volatility could mean both up-side or down-side right now. Handicapping the direction is tough business. Right now, the big round numbers seem to be what the market is watching. In the simplest terms, the S&P 500 looks to trade between 4400 and 4300. If we look a little deeper, the extreme up-side resistance is likely at the 200 day moving average (4460), and the downside… well, there isn’t much support. Keep an eye on 4280/4235 — if those support areas fail, it may be “look out below.”

The Fed is backed into a corner. However, there are lots of speeches this week. Powell testifies this week on Wednesday. If the Russia uncertainty gives a hint that tightening may occur slower than anticipated the markets could view this as a positive. If not, we’ll see.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

2/22/22

At this point the markets are trying to sort out just how bad it could get with a new war. Russia looks like they’re moving forward in Ukraine. Keep an eye on China next looking toward Taiwan.

Meanwhile, the Fed is all but out of bullets as inflation goes nuts.

So yeah, not a lot to be optimistic about right now.

The technical picture looks pretty bleak. Futures are way down, and a breach of the prior lows of a few weeks ago could signal a full-blown bear market decline from here.

The signs are pretty heavily risk-off at this point. Looks like we could be in for a rough week… at least it’s a short one.

Markets show no support at these levels. If the selling starts, it’s tough to find a floor right now.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Mind the 100dma

This week the SPX may key off of the 100 day moving average.

Back on December 3 and 20, this was the support level for the index. That support was breached on January 19th, then re-tested February 2nd. So?

So the major index has recovered from it’s January 26 intra-day low and rebounded back to the 100-dma. Initially it pulled back from this resistance level. But, it also happens to be sitting at 4500. That’s less than 20 points below the 100-dma. And futures are implying a positive open.

It’s an interesting time for the markets. Big Tech, a la Meta (Facebook) and Amazon had swings of over 20%. Just for perspective, that’s over a quarter of a trillion dollars in market cap we’re talking about. Those numbers are tough to fathom – as in, bigger than entire countries… heck, blocks of countries. And the market just yo-yo’ed them around.

All this is to suggest that Big Tech has been the primary culprit here. It’s been discussed here before. As tech goes so goes the economy. Or, better said, as long as tech looks good, it can hide a lot of other problems in the economy.

But unstable and rising interest rates are a headwind for tech – or so we’re told. Markets have been reigning them in for most of 2022. And we’ve seen the indexes reflect it.

Looking forward, it’s possible the correction is about over – at least in the short-term. The SPX saw over a decline over 10% and the NASDAQ nearly crossed officially into bear territory. Since then, prices have shuffled around and started to recover.

The question is whether or not Fed rate hikes will spell disaster for the markets. History says markets go up at first during rate hikes. But data also says those rising markets ultimately fail at the end of a rate hike cycle. So how long does the honeymoon last before rates catch up? And much faster does the market price in news today than in years past?

All of these are questions we’ll probably answer in hindsight. For now, simply taking the market at what it’s showing us, it appears the momentum has shifted back to sideways-to-positive. If this proves to be the case, this week is significant. If the SPX manages to close above the 100-dma it could be looking for the next significant resistance level at 4625. That’s not a huge week, but it’s definitely positive.

A failure to post a higher close this week would likely be a bad signal for the markets at large. If this were to happen, a re-test of the 4350-area prices is likely in order.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Too Early for the All Clear?

January has been rough on investors. The major indexes have all flirted with corrections. The Nasdaq has flirted with a full-blown bear market. The question is whether or not more selling is in the future? Short answer: unknown.

The good news is, futures aren’t indicating a major swing down at the open. And Friday closed with a lot of buying headed into a weekend. That is a hint traders the bulls may be showing up to the party again now. But the technicals are yet to signal an ‘all clear’ on this one.

While a lot of historical data suggests markets rise during rising rate scenarios due to the strength of the economy, there is a lot of stuff that is far from ‘typical’ when data fitting.

This week should give a pretty good tell. Last week’s aggressive fall did reverse. So the pattern for the week ended up more one of consolidation than continuation of a downtrend. The question is, will a breakout to the upside occur from here?

While the typical oversold indicators we use show us in an oversold condition, the aggressiveness of the drop is yet to be washed out of this market. Presently the S&P 500 is right at its 200-day moving average. This level has thus far proven to be a resistance area. So failure to close above this level this week could be considered a negative for analysts.

If the 200dma resistance isn’t broken through, look for a re-test of last week’s lows in the 4300s intra-day. A close below 4326 would be viewed as bearish. A close below 4300 would likely indicate a more significant leg down towards 4200/4150. The probability full-blow bear market correction increases significantly in this scenario as consumer sentiment likely gets pretty damaged.

Futures suggest a slightly negative open Monday but the commitment is low. Trading has been in a narrow range most of the night. The market seems to want to find support at this level. We’ll see if the bulls or the bears win out this week.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.