The Pullback is in Effect - Broad Market Levels - 08/26/2022
August 29, 2022
Knox Ridley
Portfolio Manager
The next 2 weeks will be very telling on what to expect over the next year. The pullback we've been warning about is in effect. In this week's broad market levels update, Knox walks through possible scenarios the market may face as 2022 comes to an end. Find out what the two long-term bullish scenarios that are most probable now.
Timestamps:
00:00 - Knox’s Two Most-likey Scenarios
03:38 - The Bullish Scenario & Major Support Zones
07:40 - In a Bullish Scenario, When’s the Right Time to Buy?
09:25 - The Third Largest Down Day in a Bear Market
Two Long-term Bullish Scenarios
Market Scenario #1
The first scenario is that June 16th was the major low and that we are now in a new uptrend. As long as we hold 4000/3975 and then turn back up to make one more high above 4330 SPX, then the case for a new long-term bull market will remain intact. On the other hand, if we break below 4000/3975 SPX, the risks become much more elevated as we move into the end of 2022. In this scenario, Knox would expect one more big push higher before the next large leg lower manifests.
Market Scenario #2
The second scenario is that we are currently finishing the first of three legs of a larger bear market. In this scenario, if the SPX breaks below 4000/3975, the risks become much more elevated as we move into the end of 2022.
In the bullish scenario, Knox advises investors to buy on the second wave retrace, sometime in October. On the other hand, if we are in a larger bear market then the I/O Fund will take on momentum plays.
The Third Largest Down Day Since the Bear Market Started
Finally, Knox also touched on the railroad track pattern on the third largest down day since the bear market started.
"It was such a low-volume day for such a huge move." - Knox Ridley
Despite the day’s bearishness, it was well below the 162 trading day volume average. There seem to be positive signs from divergence/oscillation indicators, which could signal a reversal in the SPX.
Sign up for I/O Fund's free newsletter with gains of up to 403% -Click here
Catch up on I/O Fund Broad Market Levels
Levels to Monitor in the Coming Pullback
In early July, the broad market failed to make new lows even despite the bad news. The CPI print came in at a 40-year high, followed by the producer price index surprising the upside. This told the market that inflation was still an issue and would likely be in the near future. This was then followed by mixed banks earnings, as reports of a looming economic slowdown and run-away inflation were starting to show up in earnings.
Is a New Bull Cycle Building? - Broad Market Analysis
Broad Market Levels Update - August 18, 2022 - Knox notes that the high-frequency data continues pointing toward a slowdown with inflation.
About I/O Fund Premium Stock Investing Services
Premium Members currently enjoy all 7 Premium benefits below.
- Premium library of institutional-level research and analysis, including fundamental stock analysis and advanced market signals on technicals and macro analysis.
- Weekly Webinars on advanced market signals and broad market, plus quarterly portfolio reviews on Long-Term Buy and Hold tech stocks.
- Technical Analysis on stocks and Broad Markets with charts on all major US markets, analysis of inflation and growth, as well as 60 global markets to help us focus on risk/reward for entries and position our portfolio based on the macro-environment.
- An Active Forum made up of a community of like-minded investors with robust conversations including both fundamental and tech product analysis.
- A completely Transparent Portfolio made up of long-term buy and hold positions, crypto, and Long/Short Momentum positions.
- Trade Alerts are sent directly to your phone via SMS and email.
- NEW! Automated Hedge with advanced signals to help spot approaching risk in the markets, with a 67% win rate going back to 2003 with only 40 signals triggered.
About I/O Fund Portfolio Manager Knox Ridley
Knox Ridley began consulting on portfolios in 2007 and is an experienced growth investor in both bull and bear markets, which is hard to find these days. As the portfolio manager of the I/O Fund, he beat the top-performing funds on Wall Street in both 2020 and in 2021. His real-time trade notifications to premium subscribers have garnered 27 entries with over 100% gains in the last two years. Knox began his career as an ETF wholesaler in 2007 before becoming a portfolio consultant for large RIAs, FAs, and Institutional accounts. He is very keen on macro trends and is trained in Fibonacci Trading, Elliott Wave theory, as well as Gann Cycles. He also uses classical technical analysis to manage risk and identify great risk/reward setups. Knox is known for increasing and decreasing allocations for record-breaking returns.
More To Explore
Newsletter
Google Stock Clears Major Hurdle, Yet One Serious Concern Remains
This week, Google cleared a major hurdle with Search accelerating from 10 points of growth last quarter to 12 points this quarter -- putting to rest many doubts that Search monetization is at risk giv
Can Oracle Become the Next $1 Trillion AI Stock?
When it comes to AI cloud leaders, Oracle is not often mentioned, yet the company is quickly positioning itself to lead among Microsoft, Amazon and Alphabet when it comes to cloud growth over the next
Robinhood Stock: Spot Crypto Volumes May Lead to Incoming Volatility
Robinhood’s fundamental transformation over the past two years has been nothing short of remarkable. Crypto is driving strong revenue growth at 50% YoY in Q1, while TTM operating margin is approaching
AI Stocks in 2025: What Every Investor Should Know
The market evolves quickly, and nowhere is that more apparent than in AI stocks, which continue to lead in both innovation and returns. At the I/O Fund, our deep coverage of AI stocks, combined with a
Nuclear Power Emerging as a Clean AI Data Center Energy Source
Data center power demand is forecast to surge over the next decade, with some estimates seeing demand increasing 3x by 2030. Inference is expected to be a primary driver with power demand growth proje
AMD vs Nvidia: The AI Stock That Could Win by 2028
Last week, AMD offered more details on the release of their groundbreaking GPUs with little fanfare in the markets – which is par for the course as AMD has a history of being forgotten about until the
This AI Stock is Set to Surge from Inference Demand
Up until now, the AI conversation has been dominated by training and compute, yet inference is showing signs of exploding growth. Microsoft and Google recently highlighted 5x to 9x YoY growth in AI to
Taiwan Semiconductor Stock: AI Growth Amid Geopolitical Risk
Despite their leadership, AI stocks like Taiwan Semiconductor and Nvidia are flat year-to-date and trading at similar levels as June 2024. Clearly, the AI trade is not as straightforward as it might s
Historic Market Uncertainty Meets $7 Trillion Debt Wall: What Comes Next for the S&P 500
We are seeing mounting evidence that this bounce may be the start of a new push to all-time highs, such as improved breadth, better than expected earnings plus the size of this bounce. However, one ca
Nvidia Stock Faces a Choppy Q2, But Tailwinds Build for H2 Acceleration
Nvidia’s streak of blockbuster earnings has turned investor expectations into a high-stakes game— anything short of perfection risks disappointment. As the company gears up to report fiscal Q1 results
