S&P 500: What To Make Of Tuesday’s Weak Close
2022.04.06 07:46
S&P 500 Index, Daily Chart
The S&P 500 continued struggling with 4,600 resistance Tuesday, but this isn’t a surprise. Last week I wrote the post: “Now that we have a mountain of profits, how to protect them“. In it I said:
Well, here we are, a few days later and the market is nearly halfway back to 4,400 support. Funny how that works.
As I’ve been saying all year, markets move in waves. That was just as applicable at the bottom of the wave, as it was back in early March, as it is following a huge, 450 rebound from those very same lows.
Stocks go up and stocks go down—that’s what they do. Yet every time it happens, people get caught off guard.
Anyway, back to Tuesday’s price action. It was awful. An early test of 4,600 resistance failed and the index closed at the intraday lows. That’s not a good sign.
While headlines remain dreadful, they are not getting worse. “Less bad than feared” was good enough to rebound from last month’s oversold levels. But now that huge wave of buying is behind us and it is getting a lot harder to convince new buyers to pay these premium prices.
Tight supply got us here, but we need new demand to keep going. And unfortunately, it’s nowhere to be found.
Maybe after the index retests 4,400 support and bounces, buyers will finally start feeling more comfortable at these levels. But until then, we continue sitting on the pile of profits we locked in last week and wait for the next bounce.
Be ready because it could come as soon as Wednesday. (Start small, get in early, keep a nearby stop, and only add to a position that’s working)
Tesla (NASDAQ:TSLA) is blowing the doors off the competition, this time by announcing a huge stock split. While I don’t buy into the hype around stock splits, I love anything that is going up and TSLA definitely fits in that category. Good thing we’ve been in TSLA since it bounced off of $800 last month. Now there is nothing to do but lift our stops up near $1,050 and see where this goes.
