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Gold prices ease after hitting record high

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Trends & Analysis
News

Gold prices ease after hitting record high

News

Week Ahead Preview: 17th of February

News

Europe stocks hit record high on strong earnings

News

BRIC currencies mostly gain as US inflation rises

News

Refresh your portfolio with Coca-Cola?

News

GBP/USD price may rally to multi-week high

Asset Watch

Should you buy the S&P 500 dip?

Tuesday, August 8, 2023

August began with a whimper as bearish S&P 500 seasonality collided with higher interest rates and a downgrade of the U.S.’ credit rating. As August is known to be a choppy month, Fundstrat’s Tom Lee – a dedicated bull – told clients on Aug. 2 that “we are entering August just a bit more wary than other months.”
He noted the DeMark “13” signal flashed recently, and the last three times this occurred over the last 12 months, it preceded S&P 500 pullbacks of 19%, 8% and 9%. He believes investors “need to be vigilant” in the weeks ahead.

While the S&P 500 remains in an uptrend, playing the moving averages could be a wise way to remain invested and avoid a large drawdown. The index held above its 20-day moving average for more than two months before a breakdown occurred on Aug. 2. The key level has also become resistance, with an intraday rally above it reversing on Aug. 4, and the S&P 500 closing at the lows.

However, prior breakdowns were bought near the 50-day MA in April and May, so if the index approaches 4,406, aggressive traders may want to position for a reversal. A more conservative approach would be to wait for a bounce off the 50-day MA before executing.

Either way, should we be concerned when a long-term bull turns tactically bearish or will buying S&P 500 dips remain profitable in 2023?


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