To: Les H who wrote (28238 ) 10/25/2023 11:02:53 PM From: Les H 1 RecommendationRecommended By
Respond to Stocks faltered on Wednesday amidst a poor reaction to earnings from Alphabet (Google), along with a re-flaring of the cost of borrowing and the price of oil. The S&P 500 Index ended down by 1.43%, closing within the significant band of horizontal support between 4100 and 4200. While the aforementioned range remains the key hurdle to scrutinize, further declines below the 200-day moving average is enough to raise a bit of concern heading into the strongest time of year for stocks that gets underway at the end of this week. There is a saying that “nothing good happens while price is below the long-term average” given the number of occurrences of sharp daily declines while below the hurdle, therefore this has to be contemplated as a risk as the market gets set to enter the period of seasonal strength ahead. The short-term trend remains that of lower-highs and lower-lows stemming from the July peak and momentum indicators continue to hold positions below their middle lines, characteristic of a bearish trend. While the risk-reward for stocks still appears favourable for the seasonally strong timeframe ahead, against the band of support that is now being tested, we have to acknowledge the incremental increase in risk that has developed, threatening the prospects of a year-end rally. The lack of fear back above the 21 hurdle on the VIX (by Wednesday’s close) still keeps the prospect that we have realized a buy signal according to our simplistic 12-21 strategy, as highlighted in our previous report.equityclock.com
