By: Tom Gentile
on October 4th, 2022
Hard to say what it is with only experiencing two ‘trading’ days in October, but this bounce, and yes we are calling it a bounce until it can prove to do much more to the upside than it has, is pretty impressive.
The S&P 500 was down close to 8% for the month of September.
These first two trading days for October has seen the S&P 500 regain 5.7%, its best 2-day gain since March of 2020.
Susquehanna’s Chris Murphy noted that 97% of S&P 500 stocks are up for the third time in the past five trading days. This and the below data shown in a reported article by CNBC.com.
The broader market index, S&P 500, hasn’t seen this type of strength since at least 2000.
Support for the S&P 500 Established
Make no mistake that the Fed is still committed to raising interest rates in their ongoing efforts to fight off inflation that is still at multi-year highs.
We don’t see an immediate cure all that will end this high inflation environment and the risk of a recession remains.
But, the markets were oversold and call it dollar cost averaging, bargain shopping investing short covering ( or a combination of all three) the markets have bounced.
If and when the markets pause and or slide back, the key support level we see for the S&P 500 is illustrated in Figure 1.
The low price of that pivot area, which looks to be about 357 is what needs to hold in order for us to remain at least optimistic for the markets.
App: Toms Option Tools
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