Breaking News
Investing Pro 0

Why No One Should Have Been Surprised by Friday’s S&P 500 Rebound

By Jani ZiedinsStock MarketsJan 22, 2023 03:32AM ET
www.investing.com/analysis/why-no-one-should-have-been-surprised-by-fridays-sp-500-rebound-200634574
Why No One Should Have Been Surprised by Friday’s S&P 500 Rebound
By Jani Ziedins   |  Jan 22, 2023 03:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
US500
+1.47%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

S&P 500 Index Daily Chart
S&P 500 Index Daily Chart

What a difference a day makes. After falling for three sessions in a row, the S&P 500 came roaring back Friday, adding an impressive 1.9%.

As much as the financial press loves to attribute every zig and zag to some major fundamental catalyst, the truth is the market moved this week for no other reason than it can’t stand still.

The index ran up to 4k last week and that was all the excuse savvy swing traders needed to pull the ripcord and lock in some really nice profits. Their selling triggered reactive waves of follow-on selling as the crowd started to worry that 4k resistance, the 200dma, and 2022’s downtrend line signaled a major top and the market was on the verge of the next big crash.

But as is always the case, when we don’t have a significant and unexpected headline driving the market, the wave of selling exhausted itself and prices bounced.

Lucky for readers of this free blog, this is the exact setup we were looking for. As I wrote Thursday evening: 

[H]eadlines haven’t changed in a meaningful way and this retreat looks like little more than a routine pullback from overhead resistance. While down is down, routine reactions to technical levels rarely lead to big changes in the market’s direction. Think of these as the normal step back that follows every two steps forward…[N]othing has changed and that means this is most likely just another routine buyable dip on our way higher. At least that’s how I’m approaching it until proven otherwise.

Instead of proving me wrong, the market proved me right in a big way on Friday by rallying nearly straight up. So much for all the fear-mongering and market-bashing going on this week.

But before we pat ourselves on the back too hard, the problem is if the week’s selloff didn’t have the strength to go very far, then we shouldn’t expect Friday’s rebound to carry us very far either. Expect this wave of buying to stall just as quickly as last week’s selling did.

Sometimes we buy the breakout and sell the breakdown. Other times we do the exact opposite. This happens to be one of those opposite times. The market isn’t poised for a big directional move and that means we trade against these breakouts and the breakdowns.

As good as Friday looked, expect the buying to stall over the next few sessions and it wouldn’t be a surprise to see the index retest 3,900 support over the next few weeks.

For savvy traders, this means taking profits when we have them. Everyone that bought Friday morning, move up our trailing stops and even consider locking in some profits proactively because we should be prepared for this choppiness to continue.

Why No One Should Have Been Surprised by Friday’s S&P 500 Rebound
 

Related Articles

Sam Quirke
Has Salesforce Turnaround Begun? By Sam Quirke  - Feb 02, 2023

Salesforce (NYSE:CRM), the customer relationship management (CRM) giant, has been making headlines recently for both good and bad reasons. Considering the stock has fallen as...

Why No One Should Have Been Surprised by Friday’s S&P 500 Rebound

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (13)
nc ing
nc ing Jan 23, 2023 10:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
very smart
Dweeptaru Das
Dweeptaru Das Jan 23, 2023 4:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
u bet for the markets to rebound and that was granted
Adrian Wooldridge
Adrian Wooldridge Jan 23, 2023 1:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is the most honest post ive seen in a long time
Peter Lee
Peter Lee Jan 22, 2023 10:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
as long as fed keeps raising interest, the market will not have a big long up trend.
Adamo Nals
Adamo Nals Jan 22, 2023 9:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Youll never understand reality jani. $200 a share times 14X equals 2800 s&p. And thats AT BEST. Period. Math fundamentals. That is how you VALUE indexes and stocks. Not wishful thinking amd HOPE. Momo s ws. All of you.
Abolish The Fed
Abolish The Fed Jan 22, 2023 6:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Not sure if the author is a dude or a chick
Brad Taylor
Brad Taylor Jan 22, 2023 9:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Generally, wild volatility is rarely a bullish indicator and current economoic uncertainty is certainly not bullish. Technically, there has been no “give up” blow off bottom in this market yet.
jason xx
jason xx Jan 22, 2023 9:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So?
jason xx
jason xx Jan 22, 2023 8:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I disagree about next week there is 2 major catalysts that can trigger a big move. 4th qt GDP and PCE Thursday and Friday
jason xx
jason xx Jan 22, 2023 8:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ill give you the credit you deserve for this. You did tell us not to give up on the rally. I am bullish but even I was second guessing myself
hd tv
hd tv Jan 22, 2023 6:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
there was no significant headline to drive last years downtrend inafact one of the best days was one the day of Russians invasion so that narrative doesn't hold any substance, the current market is been driven by 0dte options which has account for nearly 50% of options over the last few weeks, ie people don't trust the upwards more but are just gambling on daily swings.
jason xx
jason xx Jan 22, 2023 6:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So what? People are notoriously paranoid about money
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email