The S&P 500 has been on a stellar rally this year, rewarding long-term investors who bought and held through market turbulence. However, the current technical and macroeconomic setup suggests a possible correction could be on the horizon. Here’s how to approach it strategically.
🛠️ Technical Analysis from the Chart:
1️⃣ **Resistance Zone (6025-6050):**
- The index is facing strong resistance in this red zone, indicating a potential **stall in bullish momentum**. Failure to break through this level increases the likelihood of a pullback.
2️⃣ Critical Support Levels:
- **5690-5628 Zone:** First significant demand zone. A break below could trigger deeper corrections.
- **5395-5365 Zone:** Key structural support from previous accumulation.
- Long-term potential target near **4500**, aligning with historical correction structures.
3️⃣ Weekly Close Watch (5977.8):
- A **close below 5977.8** could confirm the start of a correction, likely forming a 3-to-5 wave structure typical of corrective phases.
🌍 Macro Context – Inflation and Valuations:
- Inflation Data:
- In **March 2020**, inflation was at **1.5%**, and stimulus packages helped buoy the market.
- By **March 2021**, inflation climbed to **2.6%**, reflecting economic recovery and stimulus impacts.
- November 2024 inflation** sits at **2.7%**, signaling a moderating trend but with base effects and monetary policies still in play.
- Market Valuations:
- The **Buffett Indicator** (Market Cap to GDP ratio) shows the market remains significantly overvalued. This aligns with Warren Buffett’s recent positioning, where **25% of his portfolio is in cash**, waiting for better buying opportunities.
💡 Trade Idea:
📉 Prepare for the Correction:
- A correction to the **4500 level** would represent a compelling buying opportunity for long-term investors.
- Avoid shorting the market; instead, focus on cash preservation and building a watchlist of fundamentally strong companies.
📊 Long-Term Strategy:
- Stick to Warren Buffett’s principle: **"Be greedy when others are fearful."**
- Utilize cash reserves to capitalize on discounted prices during market panic.
📌 Key Levels to Watch:
- Resistance: **6025-6050
- Supports: **5690-5628**, **5395-5365**, and long-term 4500.
🚀 Optimistic Outlook:
Corrections are **opportunities, not threats**. They allow investors to buy quality assets at a discount and position themselves for the next bull cycle.
"Price is what you pay; value is what you get." – Warren Buffett 🐂✨
Let volatility work in your favor! 🌟
🛠️ Technical Analysis from the Chart:
1️⃣ **Resistance Zone (6025-6050):**
- The index is facing strong resistance in this red zone, indicating a potential **stall in bullish momentum**. Failure to break through this level increases the likelihood of a pullback.
2️⃣ Critical Support Levels:
- **5690-5628 Zone:** First significant demand zone. A break below could trigger deeper corrections.
- **5395-5365 Zone:** Key structural support from previous accumulation.
- Long-term potential target near **4500**, aligning with historical correction structures.
3️⃣ Weekly Close Watch (5977.8):
- A **close below 5977.8** could confirm the start of a correction, likely forming a 3-to-5 wave structure typical of corrective phases.
🌍 Macro Context – Inflation and Valuations:
- Inflation Data:
- In **March 2020**, inflation was at **1.5%**, and stimulus packages helped buoy the market.
- By **March 2021**, inflation climbed to **2.6%**, reflecting economic recovery and stimulus impacts.
- November 2024 inflation** sits at **2.7%**, signaling a moderating trend but with base effects and monetary policies still in play.
- Market Valuations:
- The **Buffett Indicator** (Market Cap to GDP ratio) shows the market remains significantly overvalued. This aligns with Warren Buffett’s recent positioning, where **25% of his portfolio is in cash**, waiting for better buying opportunities.
💡 Trade Idea:
📉 Prepare for the Correction:
- A correction to the **4500 level** would represent a compelling buying opportunity for long-term investors.
- Avoid shorting the market; instead, focus on cash preservation and building a watchlist of fundamentally strong companies.
📊 Long-Term Strategy:
- Stick to Warren Buffett’s principle: **"Be greedy when others are fearful."**
- Utilize cash reserves to capitalize on discounted prices during market panic.
📌 Key Levels to Watch:
- Resistance: **6025-6050
- Supports: **5690-5628**, **5395-5365**, and long-term 4500.
🚀 Optimistic Outlook:
Corrections are **opportunities, not threats**. They allow investors to buy quality assets at a discount and position themselves for the next bull cycle.
"Price is what you pay; value is what you get." – Warren Buffett 🐂✨
Let volatility work in your favor! 🌟
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Wyłączenie odpowiedzialności
Informacje i publikacje przygotowane przez TradingView lub jego użytkowników, prezentowane na tej stronie, nie stanowią rekomendacji ani porad handlowych, inwestycyjnych i finansowych i nie powinny być w ten sposób traktowane ani wykorzystywane. Więcej informacji na ten temat znajdziesz w naszym Regulaminie.