This guest commentary was written by Mike Shell. It was originally published on ASYMMETRY® Observations on 8/11/20.
On Friday I suggested “If we’re going to see selling pressure become resistance, this is where it starts” and though this has been an incredibly resilience market, I’m seeing signs of weakness.
I shared some of the signs this afternoon in “Point & Figure Charting the NASDAQ Trend.”
As the trading day got to the close, the S&P 500 and other stock market indexes drifted down.
The S&P 500 tapped its prior high, then backed off.
The NASDAQ 100, which has been in the strongest uptrend, also reversed down the most at nearly -2% today.
I had pointed out the internal weakness in the NASDAQ stocks earlier today.
It seems to be a continuation.
So, “If we’re going to see selling pressure become resistance, this is where it starts” and we’ll soon see if the US stock market attracts some new selling pressure, or if it’s there is enough enthusiasm to buy to overpower any selling.
Even the longest of long term investors should be aware of the risk this could be a significant top in the US stock market. That is, no matter how passive or “buy and hold” you are, if this turns out to be the early stage of a prolonged bear market, you’ll wish you had put in a place a hedging and/or risk management program to protect your capital.
ABOUT MIKE SHELL
Mike Shell is the founder of Shell Capital Management, LLC and the portfolio manager of ASYMMETRY® Global Tactical and ASYMMETRY® Managed Portfolios.
This piece does not necessarily reflect the opinion of Hedgeye.
