It has been a volatile week for the SP500 with more than a six percent swing over the past few days. The S&P 500 dropped as much as 2.6% on Thursday after Russia invaded Ukraine, but the benchmark index ended the session up 1.5% in a buy-the-dip trade led by the mega-caps/growth stocks. When this sort of wild event happens I like to take a look at a bit longer point of view to put things in some context.

Above is a weekly chart for SPY as of Friday morning. As I type this post, we are just underneath the 50 exponential weekly moving average. The red line. Going back to 2015 this has only happened 3 other times. They are marked on the chart. Each time following a close below the 50 the market went on to make lower lows. The average loss from here… an additional 16%. You can see where we are now (Friday morning) on the upper right-hand side.

So the close today is important. The near-term trend is down with war, inflation, and higher interest rates weighing on sentiment. A close below the 50 would be a confirmation of that and perhaps trigger more automated trading to the downside. Time will tell.

UPDATE: After a strong Friday session we closed above the 50 WEEKLY EMA at 4384.

No single indicator gives market clarity. They each give a point of view that we factor into our model. This is not a prediction, it is a perspective that we need to pay attention to various possible outcomes.

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Distance=Victory

Chris

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A Wild Week Needs A Longer Point Of View!