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S&P 500 (SPY)
Stocks finished slightly lower, and well of their intraday lows. The S&P 500 was down about 90 basis point today but managed to rally back to down only 20bps. Today’s price action doesn’t mean we are out of the woods by any stretch of the imagination. I am a bit more concerned tonight than I was before the day started.
Those who have been reading this blog long enough can immediately see on the chart below what is bothering me. For those that are new, it is that large gap lower opening we had today. By days end that gap was filled. The general rule for gaps: once filled, the previous trend continues in this case that is lower. I do think that the S&P 500 has the potential to fall to around 2,690 over the short-term, and perhaps as low as 2,630. It would be between a 5 to 7% drop from the recent highs.
Russell 2000
The Russell managed to finish well off its lows. However, as one can see from the chart, the Russell struggled all day around the 1,520 region. The 1,450 area on the Russell is a genuine possibility in the coming days.
So now, we will need to wait and see what happens next. It is not to say that the bullish outlook for the year is over. That is not the case at all; this is about the next few days and weeks.
Today’s commentary may be my shortest write-up ever. But it is Friday, and that means we have all weekend to lament about the potential pullback that is looming on the horizon.
-Mike
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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