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Why The Indexes Keep Telling Us They Want To Go Higher, Not Lower

By Jani ZiedinsStock MarketsJun 18, 2021 01:50AM ET
www.investing.com/analysis/why-the-indexes-keep-telling-us-they-want-to-go-higher-not-lower-200586847
Why The Indexes Keep Telling Us They Want To Go Higher, Not Lower
By Jani Ziedins   |  Jun 18, 2021 01:50AM ET
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Thursday turned into another choppy session for the S&P 500 with second thoughts pushing the index back to 4,200 support for the second day in a row. But just like Wednesday, this follow-on selling stalled and bounced back within hours and the index finished the day right back where it started.

BTC/USD Daily Chart
BTC/USD Daily Chart

Investors keep fretting over the Fed’s interest rate comments, but as has been the case all year, most owners shrugged at the news and kept holding. And Thursday’s wave of selling didn’t change many minds.

The end result is the index tested 4,200 and bounced off of it for the second time in two days. This is the behavior of a strong market, not a weak one.

That said, a third test of support won’t end as favorably. Fall back under 4,200 so soon after bouncing off of it means the ride is about to get a little bumpier. But just like all of the other dips we came across this year, this is a buying opportunity, not a reason to run for the bomb shelter.

Keep holding for higher prices with stops under 4,200. If prices dip under our stops, get out and be ready to buy the next bounce, something that could happen as soon as a few hours later.

Bitcoin popped above $40k this week after Elon said Tesla (NASDAQ:TSLA) would consider taking bitcoin payments for cars again if the cryptocurrency can clean up its carbon footprint. That said, the push above $40k was short-lived and we are back in the upper $30k’s again.

At this point, $40k is the line in the sand. Get back above this key level and we are headed back to $50k. But if we keep hitting our head on $40k resistance, anticipate another retreat back to $30k support.

Anyone that bought the bounce off of $30k support should at least consider taking some partial profits near $40k. It is always easier to buy back in than it is to wish prices higher after missing a good selling opportunity.

Why The Indexes Keep Telling Us They Want To Go Higher, Not Lower
 

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Why The Indexes Keep Telling Us They Want To Go Higher, Not Lower

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Comments (2)
Ron Love
Ron Love Jun 18, 2021 1:01PM ET
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Because we are in a secular bull market?
simone scelsa
simone scelsa Jun 18, 2021 3:50AM ET
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The indexes are seeing inflation before everything else (even more than commodities). Earnings per share have not reached the pre-pandemic level yet and the SP500 is up 25% from 2019 levels. The new money went to the financial assets first
 
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