Incredible day in the market. However, we are not out of the woods yet on this correction. It is not unusual during a correction or a bear market to have incredible rallies like we had today. We will likely come down and retest those recent lows at some point. However, I do believe the bull market is still intact.
I know many of you are deeply concerned about the markets and of course what’s going on in Europe. It is extremely concerning in this day and age to have a full-fledged war in Europe. I think much of the rally today had to do with how well Ukrainian defenses are going.
I wanted to give you some market levels on the S&P 500 that I’m watching. It’s important to note that old support becomes new resistance when you’re trying to climb back up after a selloff. We’re starting to run into one of those resistance levels just above us.
If we can get back up above 4400 on the S&P 500 then I would look to 4600 on the S&P. We will likely be in a trading range with the top being 4600 and the low being 4200. I would prepare yourself for a choppy first half of the year.
So what is this mean? For long-term investors who have their asset allocations set, not much. However, if the recent volatility has worried you, we can lighten your equity position on those rips. The worst thing to do in a sideways trading market is to sell when everything is scary. You look for those capitulation scary moments to add back into equities. However, whatever you do, be strategic and use your financial planning and asset allocation as the guide. Think long-term.
The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Asset allocation is an investment strategy that will not guarantee a profit or protect you from loss.
Investors should consider their financial ability to continue to purchase through periods of low price levels.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.