The breakdown from the recent high on the S&P 500 has been rather slow and graceful. That is often seen as a good way to breakdown as there is a steady build of volume through time. In other words, it creates a solid area of support when (if) price can get above in the future.
As the S&P 500 is not below key support of 1,399, the potential breakdown to the next level of support of 1,390. Beyond that, the next level of support is down to 1,368.
More importantly is how it will get there. The potential for a quick break lower is high as there is a fast zone (identified by the red-shaded box). That is a key area of little to no support in between and where some damage can be done to equities.
Once that the S&P 500 price enters that zone, there is a high probability that the next level of support will act as magnet.
Out portfolio game-plan is to continue to hold key positions on the long side, until they breach support levels that we have identified, add some short hedges (like puts and/or inverse ETFs) and monitor for volume and support levels. If the markets close today at the current levels, we would see our Market Trend Indicator (MTI) knocked down at least one level. This would demand a much more defensive position and change position sizing for holdings.
It will also create a higher probability for short candidates for TPR ALERTS!.
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