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S&P 500 Near All Time Highs and What We Got Right

S&P 500 Near All Time Highs and What We Got Right | FXMAG.COM
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It was a thunderous day for equity indices yesterday, with the S&P 500 approaching all-time highs. Our analysis has worked well. What comes next for the benchmark US index?

Greetings! What a move in the $SPX from its 50-day moving average touched on Friday and Monday. In fact, the S&P 500 had its best two days since May 14th!

We heard from Chair Powell yesterday during his testimony at the House of Representatives. It was a politically fueled discussion , with Republicans highlighting the lack of desire of many workers to return to work in some states. The market moved higher off the testimony, with Chair Powell reiterating that inflation was indeed transitory and very sector-specific. Is this correct? I suppose time will tell. What matters for us is that the broader markets moved higher during and after the testimony; while beginning to retreat in the final 30 minutes of the NY session.

If you have been following along or are a Premium subscriber, you know that we had been waiting for an entry into the S&P 500 at or near the 50-day simple moving average for quite some time. After waiting with patience and discipline, we got our signal on Friday and Monday with the $SPX briefly trading below this key level and ultimately reversing to the upside on Monday.

s p 500 near all time highs and what we got right grafika numer 1

Figure 1 - S&P 500 Index March 19, 2021 - June 23, 2021, Daily Candles Source stockcharts.com

What a wonderful move for us. It takes patience and discipline to wait and execute . Now, if you are a Premium subscriber , you received an email alert at approximately 3:38 ET yesterday, suggesting to consider exiting long S&P 500 positions. There were several reasons for this:

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  1. I realized this was the best two-day period in five weeks .
  2. Hourly RSI(14) was approaching the 70 level - indicating short-term overbought conditions.
  3. Being greedy is never a good thing.
  4. S&P 500 was within 10 handles of all-time highs.

So, around 3:30 PM ET yesterday, all of this came together in my mind and indicated that it may be a good time to sell. What if it keeps going up? Who cares. Nobody catches exact tops and bottoms in trading. The idea is to catch the meat of the move before the market takes it away. And with everything going on including inflation, higher rate environment digestion, and numerous other factors, it was a good time to take chips off the table.

s p 500 near all time highs and what we got right grafika numer 2

Figure 2 - S&P 500 Index June 22, 2021 - June 23, 2021, 10:58 AM, 15 Minute Candles Source stooq.com

I have been in and around the S&P 500 long enough to know when the index throws you a bone; you take it.

In addition, trading the $SPX around and near all-time highs can be tricky business. What would be the catalyst to break out above the old high? This morning, we got a mixed bag of mostly bearish economic data including New Home Sales, and PMI metrics. Courtesy of our friends at FX Empire :

s p 500 near all time highs and what we got right grafika numer 3

Figure 3 - Certain US Economic Data Releases for June 23, 2021 Source fxempire.com

As we can see from the above table, this morning's economic data was nothing to write home about. However, markets can remain illogical for extended periods. For the moment, my attention turns away from the indices and goes back to select names and themes until more time passes. You have to know when to stay away, too.

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Now, for our premium subscribers, let’s recap the markets that we are covering to see if any key levels have changed or new opportunities have been found. Not a Premium subscriber yet? Go Premium and receive my Stock Trading Alerts that include the full analysis and key price levels.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

Rafael Zorabedian
Stock Trading Strategist

Sunshine Profits: Effective Investment through Diligence & Care

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This content is for informational and analytical purposes only. All essays, research, and information found above represent analyses and opinions of Rafael Zorabedian, and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. You should not construe any such information or other material as investment, financial, or other advice. Nothing contained in this article constitutes a recommendation, endorsement to buy or sell any security or futures contract. Any references to any particular securities or futures contracts are for example and informational purposes only. Seek a licensed professional for investment advice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Information is from sources believed to be reliable; but its accuracy, completeness, and interpretation are not guaranteed. Although the information provided above is based on careful research and sources that are believed to be accurate, Rafael Zorabedian, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. Mr. Zorabedian is not a Registered Investment Advisor. By reading Rafael Zorabedian’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Trading, including technical trading, is speculative and high-risk. There is a substantial risk of loss involved in trading, and it is not suitable for everyone. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment when trading futures, foreign currencies, margined securities, shorting securities, and trading options. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Rafael Zorabedian, Sunshine Profits' employees, affiliates, as well as members of their families may have a short or long position in any securities, futures contracts, options or other financial instruments including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Past performance is not indicative of future results. There is a risk of loss in trading.

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