The S&P 500 has been hemming and hawing since the beginning of March, ultimately going nowhere. In these situations it’s easy to lose perspective, and forget that such instances are often the best time to buy. Let’s step back and look at the larger context.
BIG PICTURE
The weekly chart shows an uptrend that still looks healthy. Since the beginning of 2013 every reversion to the weekly mean (20-week simple moving average) has attracted buying that followed through to new heights in price. The recent choppy price action brought SPX back to the weekly mean, at which point price recovered. Past behavior never guarantees future performance, but at the same time, success is often based on continuously trading patterns that have been working in the recent past until they stop working.
It helps that the reversion to the mean occurred after a consolidation. That means profit taking by weak hands should have been absorbed, setting the springboard for more upside.
THE BOTTOM LINE
It has been a wiggly start to the year, everyone, but the bottom line is that there still isn’t any reason to abandon this primary bull. Good trading to you.
