Did Moody's Just Kill The S&P 500's Recovery?

(9min)

Summary

  • VIX at lows signals market complacency; I expect a modest pullback, not a major correction, before new all-time highs.
  • Technical charts for SPY, QQQ, and SOXX suggest a local top and a likely minor Wave 4 pullback, not a bear market.
  • Moody’s downgrade is more a convenient scapegoat for profit-taking than a true catalyst for a sustained selloff.
  • I believe the downgrade may prompt rate cuts, ultimately fueling a rally to new highs after a brief correction.
  • Looking for a helping hand in the market? Members of Growth Investor Pro get exclusive ideas and guidance to navigate any climate. Learn More »

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Nothing in this note is intended to be investment advice, and nor should it be

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This article was written by

Cestrian Capital Research, Inc. is an independent, SEC-regulated investment research business led by CEO Alex King. Alex is a professional investor with 3 decades of experience. Cestrian specializes in covering growth stocks, index ETFs and index options, long-run investing, swing trading and risk management via hedging.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of SPY, TQQQ, SQQQ, SOXL, SOXS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Cestrian Capital Research, Inc staff personal accounts hold long positions in, inter alia, SPY, TQQQ, SQQQ, SOXL, SOXS; plus SPY and QQQ puts as described. Net exposure is long.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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