Watch the 200-day moving average on the S&P 500. IT’s more relevant than you might think. (October 22, 2014)

print

I’m just looking at the S&P ( INDEXSP:.INX ) right now to give you the heads-up. Nobody really knows which way this is going, but we’ve got a pretty tight squeeze up here and the volatility expansion was to the downside; I’m looking at this really, as a resistance line. So if I were you, and I’m not, if I were you I would be really leery about buying stuff right now. It’s had a heck of a move so far and I think this one day little drop, wow, it’s fourteen points on the S&P ( INDEXSP:.INX ), big whoop, I think this still has a ways to go.

Long-term you can say, “Well that was a significant buying opportunity and I’m going to stay long.” That’s great, do that; you don’t need to be out of the market right now. But short-term what I’m saying is, you want to be taking some profits on existing positions, but also really watch this -day moving average. This is the first time in many, many moons where the S&P ( INDEXSP:.INX ) has fallen below the 50-day moving average. So, after this bounce, if it falls back below the 200-day moving average, we’ll call it 1,900.00, you’re probably going to see substantial selling from here.

My suggestion is enjoy it, but keep a tight stop, because after so many days: one, this was the reversal day, two, three, four, five big days, the S&P ( INDEXSP:.INX ) is due for a rest and there are a lot of stocks in the S&P ( INDEXSP:.INX ), like 500 of them, that are also kind of due for a rest. So keep your stops tight, I would suggest being very careful about buying new positions, and just wait for your next buying opportunity.

Free Chart

Leave a Comment