The S&P 500 has fallen a bit during the trading session on Tuesday, reaching down towards the 50 day EMA before bouncing slightly. Part of this may be algorithmic trading due to the formal impeachment inquiry going on in the House of Representatives, but at the end of the day the impossible would have to happen in order for Donald Trump to be impeached: The Senate would have to vote in favor. That isn’t going to happen, and this is more than likely just going to be more political theater than anything else. Because of this, it’s likely that this will end up being a buying opportunity given enough time, so I’m looking for a short-term bounce to take advantage of as we have been in an uptrend.
There is a massive amount of support down below the 2950 level, and then all the way down to the 2800 level. In other words, it’s probably only a matter of time before the market bounces and reaches towards the highs again. The 3025 level has been resistance, and now that we have broken below the 2980 handle, it is a bit negative, but at the end of the day it’s only a matter time before the buyers step in and as I believe. This is probably more of a knee-jerk reaction due to computerized trading, which tends to be very short term and focus. At this point, it’s very likely that this market will find buyers closer to the 50 day EMA, or perhaps even the 2900 level. Below there, the 2870 level as the 200 day EMA is probably the trend defining level. If we were to break down below there, then it’s likely that we continue to go much lower.
I believe that taking advantage of value every time that we get the offer, but you probably need to step back a little bit let the market shake itself off and stabilize a bit. Given enough time, I believe that we will test the highs again and even though this has been a rather negative candle stick, it’s only been a loss of a bit over 1%, not exactly catastrophic at this point. The markets are close to all-time highs and have acted very resiliently more than once. Buying bounces continues to work as far as I see. Otherwise, we need some type of catalyst to break the market down.
