Something happened on the way out of the turbulence channel I have been highlighting for much of July.
That something has to do with earnings being sold. While at the same time bonds deciding to go into kamikaze mode, causing a significant spike in yields. And numerous correlations breaking down all the meanwhile.
While the overall outlook remains generally bullish, there is reason to believe that the markets are now off course from the desired destination, which had us above 4600 by now.
You can see in the SPX chart above that the turbulence channel represented by the white, gray and red lines has presented problems for this market since the middle of 2022.
Here we are again in the middle of 2023 with a powerful reversal on July 27th turning into further distribution of stock from Wednesday until Friday of this week.
4445 now becomes a make or break level for the markets over the next few weeks. In fact, this is one of the most important technical tests of the year that is about to take place, with a high probability of it occurring this week.
Investors are well advised to remain on their best behavior over the short-term.
Make sure you are trading and not hoping.
How the market handles 4445 moving forward will tell us everything we need to know about what to expect for the remainder of August.
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