Weekly Broad Market Levels: The Next Major Inflection Point
September 23, 2022
Weekly Broad Market Levels: Major inflection point next, and what’s below the June low.
Last week we discussed the importance of the 3900 vs 4120 price range. Whatever level broke first would likely determine the rest of 2022. If you’ve been following our previous broad market analysis, we’ve tried to help investors get on the right side of trend changes in this challenging bear market. This week, we discuss what needs to happen in order to see a market low. Find out what the weekly market signals are telling us about the current market and learn about how the I/O Fund approaches risk and opportunities in such an environment.
With the break below 3760 today, we now know what the market has planned. The 3908 SPX level remains the level that must be broken if we are going to see any bullish momentum return to this market. In the meantime, rates and the USD continue their push higher, as equities continue to point towards the 3954 support zone. The Dow, Financials, Semis, and also the Global DOW, including the German DAX, have broken their June/July lows with the move today. We are trending, once again, very sharply into our next inflection point, which starts next Monday and lasts into Oct. 3. We will be looking for some type of temporary low next week. If this bounce remains weak, we will add it to our hedge.
Broad Market Levels Video Timestamps
00:00 - Key Market Levels - Below 3900
04:10 – Potential Paths This Bear Market Can Take.
06:32 - Secular Bear Markets
08:39 - The Fed and Rates
13:05 - Crude Oil
13:42 - U.S. Dollar
The Market Broke Below 3900 - What It Means for Investors Now
In this week’s video, we point out major support zones and what they mean for the current bear market. Watch 3760 SPX as the final support zone, which needs to hold, if we are going to see a renewed bull market in 2023. On the other hand, if the SPX breaks below 3760, odds favor that it will drop down to 3,545.
A Look into I/O Fund’s Portfolio Strategy
If the bounce from 3,760 is strong and breaks past 3908 – which would be another key level – we will take that as a signal that a meaningful low is in, and the I/O Fund will be prepared to be aggressive on the long side of this market. If, however, the succeeding bounce is weak and unable to break above 3908 the I/O Fund will add their hedge back. Advanced premium members get access to hedge signals alongside text and email trade alerts of every portfolio buy and sell.
How Do Bear Markets Play Out?
Aside from the current state of the market, we also briefly touch on Secular Bear Markets, and how they play out over time. We look at the one that played out between 2000 to 2009 as an example and show the opportunities on both the long and short side.
Supporting Markets are Suggesting a Meaningful Low Sooner (U.S. Dollar, Crude Oil, and Equities)
Finally, we look at the state of supporting markets. Rates seem to be close to a large-degree trend change, and it looks like they may start trending lower into 2023. The dollar is also coming close to confirming a large top, which would further support a renewed uptrend in equities. Crude oil also continues to remain low, and although it looks like a fifth wave push to new highs is likely, it hasn’t shown any major changes as of yet. The dollar, on the other hand, continues to disappoint, with bears failing to break through 107. Even so, the dollar is close to a large top, which would further support equities.
“The Bond Market has not signaled in an imminent Recession.” - Knox Ridley, I/O Fund Portfolio Manager
The Importance of Price Action Going into Next Week
Next week is going to be important. Wednesday is when the next major inflection point will start. In the rest of the premium webinar, we take a look at why price action is going to be key when predicting when the market will move. To watch the full premium technical analysis where we also review price action for FAANGs and three growth tech stocks we are targeting to own, sign up here.
The Next Inflection Point Starts on Monday and will last until October 03
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Catch up on previous Free Technical Analysis: Broad Market Levels
In last week’s broad market levels update, we explore potential market scenarios into the end of 2022. With the help of basic trend analysis, we hope viewers will be able to filter their emotions, so they can be on the right side of trend changes. We also cover September 16th's quadruple witching event, he details what supporting markets contributed to this bear market and ends the technical analysis by discussing the market impact of a potential recession in 2023.
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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.
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