The stock market is at an inflection point

The S&P 500 is stalling as if there is resistance at this price level, and there’s a lot of potential supply for those in a loss trap.

It’s also getting overbought as measured by the relative strength index.

The yellow horizontal highlight denotes the price range with the most volume, which you can see in the Volume by Price bars on the right which show the volume at each price level that could be support or resistence.

At the current price level, you can see the yellow highlighted area is the price range of the highest volume of the past three months.

In February, the SPY declined and found support, or buying demand, at this level. Afterward, it trended up before trending down to this level again and once again was met with enough buying enthusiasm to hold it for several days, then the support failed and the S&P 500 Index ETF declined.

At that point, those who bought earlier at higher prices around the price level or higher carried a loss.

In May the stock market trended up against but selling pressure dominated and the index once again trended sideways for several days of indecision before finally breaking down in a waterfall decline for several days.

The stock market finally got oversold again and investor sentiment was extremely bearish, and it’s since climbed a wall or worry.

Now the price has trended up to this price level again that has been both support and resistance in the past three months and it seems to be stalling.

Today started off strong, up 1% or more, only to fade by the end of the day.

The stock market is at an inflection point.

If the stock market gets enough buying demand to keep prices trending up this bear market could be over sooner than later. However, with the Federal Reserve increasing interest rates because the annual inflation rate in the US has accelerated to 9.1% and economic growth is slowing, if the US is in a recession, as noted in “Bear Markets with an Economic Recession Last Longer and are More Severe” bear markets typically last much longer and trend down more.

Investors should be cautious this may not be over yet, and far from it.

We’ll see, and probably sooner than later.

The inflation report this week may be a market mover.

Mike Shell is the Founder and Chief Investment Officer of Shell Capital Management, LLC, and the portfolio manager of ASYMMETRY® Managed PortfoliosMike Shell and Shell Capital Management, LLC is a registered investment advisor focused on asymmetric risk-reward and absolute return strategies and provides investment advice and portfolio management only to clients with a signed and executed investment management agreement. The observations shared on this website are for general information only and should not be construed as investment advice to buy or sell any security. This information does not suggest in any way that any graph, chart, or formula offered can solely guide an investor as to which securities to buy or sell, or when to buy or sell them. Securities reflected are not intended to represent any client holdings or recommendations made by the firm. In the event any past specific recommendations are referred to inadvertently, a list of all recommendations made by the company within at least the prior one-year period may be furnished upon request. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on the listAny opinions expressed may change as subsequent conditions change. Please do not make any investment decisions based on such information, as it is not advice and is subject to change without notice. Investing involves risk, including the potential loss of principal an investor must be willing to bear. Past performance is no guarantee of future results. All information and data are deemed reliable but are not guaranteed and should be independently verified. The presence of this website on the Internet shall in no direct or indirect way raise an implication that Shell Capital Management, LLC is offering to sell or soliciting to sell advisory services to residents of any state in which the firm is not registered as an investment advisor. The views and opinions expressed in ASYMMETRY® Observations are those of the authors and do not necessarily reflect the position of Shell Capital Management, LLC. The use of this website is subject to its terms and conditions.