Some Thoughts on The S&P 500 Right Now

há 11 horas

In my new 2025 project, I’m sharing charts with annotations on major risk assets right here.

Since the correction started in December, I’ve been marking key levels on the S&P 500 and have updated the chart again with today’s price action. Comparing today’s levels to the chart from earlier this week, it’s clear that patience has been the right approach. The mapped-out levels have held up, and even Howard Marks has been exploring the possibility of a bubble call. While I don't think that many people calling a top suddenly means a top is coming, actually I sometimes think the opposite, I still take note that people are possibly using this as a moment to adjust positions.

The tax year literally just ended.

A new administration starts in less than 10 days.

Record amounts of cash are still on the sidelines.

The point is, money needs to move, and downward market is the kind of action needed to start this process.

Now, back to the chart above, the market is back in its gap-fill zone, a magnet for prices that often highlights extreme optimism or pessimism in after-hours trading, only to reverse if things have moved too far, too fast.

So here we are on a Friday—no need to rush in. Instead, now is the time to start making lists of your favorite names. The correction has created opportunities, and being prepared is key. I’ll share some of my own picks soon.

This sell-off may even be a healthy rotation heading into the new administration, as markets reposition after the tax season wrap-up in December 2024.

So what does this all mean? If you have cash, stay sharp and ready. If you're long at this moment, I don't see this as the moment to sell. If you're short at this moment, I think you are just shorting in the hole and you missed the move! The chop back upward could be swift.

Best move in a market like this: map out your zones and be patient.