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The top we’ve been warning about has arrived, as the rollover could be seen this week rounding third and heading for home. After a strong 2023 so far, stocks were overdue for a pullback, and it looks like it’s here. The majority of stocks are languishing, if not breaking down right now. And for the first time this year, stock market volatility is actually catching a bid.
Now the question becomes how much of a pullback will we get? The garden variety that we come out of in a few weeks, or something ugly?
On that note, we’re keeping a close eye on the 4,270 – 4,330 in the S&P 500. A drop below and we will raise the flag that we may be in for ugly.
The stock market is typically slow and boring this time of year, as the big boys on Wall Street polish off their summer vacations. So a break of 4,300, especially before Labor Day, would be unwelcome and could set the stage for an interesting second half of the year. Regardless, with the topping pattern playing out, the risk is more to the downside than the upside for now, and we’re trading accordingly.
The other thing we need to mention is that in our years of experience, it’s during times of increasing stock market volatility like we’re seeing now when stocks are susceptible to a catalyst or an event that can have a profound ripple effect on the stock market. You never know where these events can come from, and we waste little time trying to figure it out. If we’re guessing where such an event could originate this go-around (if it does occur), we would be looking toward some sort of credit crisis resurfacing again. We think the lipstick put on that pig didn’t get the job done last time. But who knows? Your guess is as good as ours.
We mention this not to scare anyone or imply something is going to happen, but rather to simply make you aware that this is the time in stock market cycles when an event can seemingly come out of nowhere and trigger a reaction in the stock market that most folks are unprepared for. And we don’t want you to be one of them.
The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.
Good Life Asset Strategies, LLC is a registered investment advisor located in Fort Worth, Texas. Good Life Asset Strategies, LLC and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisors by those states within which the firm maintains clients.
All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Such an offer can only be made in the states that Good Life Asset Strategies, LLC is either registered or a notice filer or an exemption from registration is available under the securities laws or other laws.