Exciting times ! The S&P 500 index is only down -0.31% for the week, but it feels like we've been through the wringer. The market decline is inching closer to the 4,455 key level despite a fightback by the bulls to keep us above that level. You can now see the 50-Day SMA starting to converge to our key level which makes defending this level even more important. Friday began the session below this level and we managed to fight our way back to 4,464. The intraday chart shows the sequence of higher lows throughout the day which is encouraging, but there wasn't enough buying pressure to get us back into positive territory.
Next week is going to be interesting to see who prevails, the bulls or the bears. If we sustainably dip below the 50-Day SMA and don't rebound quickly, then the next level to watch at a guess will probably be 4,400. In the context of the current recovery, this looks to be a healthy pullback. We're only down -3.1% from our most recent peak and we're currently up 27.8% from the bear market bottom recorded back in mid October 2022. This current rally is less than 10 months old.
One does get the feeling that this is a retail investor-led rally. The narrative coming out of most institutions hasn't been all that encouraging with much of the commentary being slightly negative, highlighting everything we should be worrying about. At some stage, we're going to need the institutions to come to the party if we're to fully recover back to all time highs and move higher from there. For now, I'd be happy to hold the 50-Day SMA for selfish reasons. We only have $2.54 cash left in our brokerage account (deployed all our cash, need more dividends to come through). If the market has a significant dip from here, we don't have any ammo left in our BB gun. Unlike Buffett, we've never carried an elephant gun.