Key Takeaway
The S&P 500 has certainly had a set back as of the last couple of weeks. We are now at a point of "make or break". The market is either reverting back to it's mean and needs to hold and grow from current levels, or it could spell further trouble. We've begun to pull some select positions off and have shifted some dollars over to very conservative positions. Should this level not hold, we'll continue to do so for a while, and then begin to identify opportunities to re-enter at lower levels.
Below is a weekly chart of the S&P 500, as of pre-market Friday. When the price action drops below it's 40-week average, it typically spells trouble. This week, we've begun to breach that level, putting us on high-alert. From peak to trough (so far), the S&P 500 is down around -7.29%. When compared to the two recent prior breaks (pink circles), it appears we should expect closer to a -10% drawdown, unless things get worse. When the market experiences lower-lows, it's not uncommon to see a push back up. If that push cannot create and hold higher-lows, then you must assume we have not reached the final bottom yet. We will closely monitor the price action relative to our indicators and continue to make informed decisions on behalf of our clients.
