Is Support Broken or is it Going to Be?

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
December 6th, 2022

2 mins read
Figure 1: 100-day Candle Chart on SPY
Figure 1: 100-day Candle Chart on SPY

We can go into all the reasons stocks are at risk of going lower.

We can discuss the concerns of investors as it is being spoken to by the financial news resources as worry that the Fed will tighten too much and send the economy into a recession.

One can go over and look up all the economic data points like on the reported ISM, or the  Chicago PMI.

We can make decisions based on what the University of Michigan consumer sentiment index and / or their 5-year inflation expectations are going to be as will be reported this coming Friday.

You can pore over the housing data; you can worry about whether the Fed is going to be more hawkish than normal because the employment data and factory orders are showing stronger than expected.

Take all that and discuss it with your brokers but realize we may not have the type of money to put into or remove from the markets to influence the pending direction for it.  That being the case let’s go to the technicals and assess whether the SPY has broken or is going to break support how far down night it go?

And for that assessment. we look at Fibonacci.

Figure 2: 50-Day Candle Chart on SPY with Fibonacci Retracement Tool
Figure 2: 50-Day Candle Chart on SPY with Fibonacci Retracement Tool

These are the levels that could become support areas if enough investors use these levels in their analysis and make their buying and selling decisions based on them.

Should this become a support SPY bounces off of, then we won’t need to worry about these retracement levels (yet), and we re evaluate and look for stock and ETF’s that coincide with the SPY and or have other indicators that give you a bullish bias.

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