First, the good news:
When I warned you the S&P 500 was overbought back at the end of July, the RSI was at 70 and the MACD was at 60 - both very overbought. Just 3 weeks later, with a 200-point (4.4%) pullback, we're already getting back to oversold territory so, IFF the S&P 500 can stay above that 4,400 line through the next week (closing out Earnings Season and basically August), then we will have a very good case for keeping our aggressive chart, where 4,400 is the mid-point and not the top of the range.
Unfortunately, charts don't decide where the market is going - they only tell you where it's been and FUNDAMENTALS tell us that we're more likely to hit 4,200 around the same time the S&P's 200-day moving average (now 4,124) also hits 4,200 and that will happen in just about 30 days. Â
See, isn't in nicer to know what is going to happen rather than what has happened? Based on earnings reports, economic data and investor sentiment, we expect the 50-day moving average (now 4,450) to stop any kind of bounce off 4,400 this week and then we'll break below 4,400 next week and have a miserable August that drops us another 5% where HOPEFULLY we'll get some proper support. Â
A 10% correction is what we expected and 4,200 would be right about there so, if nothing else goes wrong, that's what we can expect and that means we'll be doing a lot of buying later in September, so make sure you are familiar with our Watch List.Â
For example, Disney (DIS) is back to where we liked it in December at $88 (now $86.35) and we didn't pull the trigger then due to the BS with Desantis and that BS is still going on but Iger is back Desantis is done politically.
