Stock Bottom In Today?

Thursday, October 11, 2018

Dear Friends,

As I write this at 12:32pm today, market action, to me, is looking like a bottom.

Obviously we will never know for sure.

Let’s look at the S&P 500 index daily chart for the past 1 year.

Focus on the blue line – that’s the long-term trend line – notice how over the past 1 year, the market has run up – and then made a correction down – right to that rising 200-day SMA (simple moving average) trend line. Notice the green circle I have made on the chart – the 200-day SMA is acting like a trampoline as it bounces off that trendline.

Today, markets have made a spinning top candlestick pattern (see the blue circle below) – that usually is a sign of a trend reversal – the short-term trend is down, and we have these two indicators showing that we may (not guaranteed) be at a bottom:

  • Bouncing off the long-term trendline

  • Spinning top candlestick pattern

That’s the technical analysis – let’s talk about the economy:

  • Consumer prices rose less than expected in a news release this morning – that’s good news. CPI rose +0.1% in September and +2.3% trailing 12 months. Two months ago the trailing 12 months hit a six-year high of 2.9%

  • The 10-year treasury bond rate dropped -1.74% today to 3.169% -- recent increases in interest rates have spooked the stock market

What to do?

  • The long-term trend remains intact,

  • That means we will suggest investors stay the course, or add more moneys to stocks, since they have made a correction

If you have concerns, call your wealth advisor. 1.800-578-3181

Founded in 1992, Jackson Wealth Management is an independent, fee-only investment advisor. Founder George P. Jackson has been the CEO/CIO of the firm since its inception with the goal of delivering value to his clients and his associates. 

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