- The S&P 500 has been bullish for about half of the month of September, and as we head into October it looks like we are trying to digest some of the previous gains.
- That’s not a huge surprise, because this is a market that has been very bullish since the bottom in April.
- In fact, on the weekly chart there are only 7 red candlesticks out of the last 26. In other words, the buyers have most certainly been in control, and I think it’s difficult to suggest that things will change rapidly.
October Could See a Pullback
Top Regulated Brokers
That being said, October could still see a pullback, in a market that probably needs one. We have been in a nice up trending channel for several months now, but that doesn’t necessarily mean that it has to go on forever. Quite frankly, the market is a little bit stretched, so we are at the point where we are going to either have to go sideways for a while, or get a little bit of a pullback, only to find buyers at lower levels. I am particularly interested in the 6500 level, as it could offer significant support due to the fact that it is a large, round, psychologically significant figure. If we were to break down below the 6500 level, then we may get a more significant pullback, perhaps to the 6350 level, and then finally the 6200 level. As long as we stay above the 6200 level, I think overall, the market still retained plenty of buying pressure.
Magnificent 7
Keep in mind that the “Magnificent 7” continue to be the only thing that people pay attention to at this point. It has a lot to do with the idea that a lot of passive investing is stuck in these handful of names, and therefore if they are doing fairly well, that means the index by its very nature will be rising as well. I have no interest in shorting the stock market at the moment, as it is not even built to fall regardless, otherwise it would be equally weighted. Ultimately, I think we are due for a little bit of a pullback, but I don’t think it will be anything more than the garden-variety pullback within an uptrend.
Ready to trade our monthly forecast? Here’s a list of some of the best stocks brokers for you to check out.