There is a lot of news about inflation, FED’s rate hike or war, which surely have an impact current stock market. However, before going to the details and complex elaborations, here is simple view for an ordinary investor to decide whether to start buying shares again or no. Without analyzing these topics, this chart is going to show you when you should consider to get into the market again.
Current correction is not over, and perhaps we’ll dip even in a bear market. Thus, it is crucially important to watch a long term support level – 200 simple moving average on a weekly chart of S&P500 index. The last three corrections were accompanied by this particular moving average when it came to the reversal, however, this is not the only technical indicator to watch. If there was a reversal, I would expect CPCE to hit or pierce level 1.0 or RSI to hit or pierce level 30. Furthermore, the signal line (red) must break up above the MACD line (black) to confirm the price will reverse and continue rising.
We are currently facing heaps of uncomfortable trading conditions and therefore, the investor should follow above approach instead of trying to catch a falling knife.