The stock market continued to falter last week as the weakness since late July persists. The S&P 500 was down as much as 5.9% since its peak on July 27th and is officially in a pullback market cycle (a drop of 5-10%).
No one likes to see a market drop, but by late July it seemed like the market was overextended to the upside and a short-term drop could be in order. I view drops of this sort as necessary for the stock market to balance itself, and for investors to position themselves for the probable next uptrend. This could be the last pullback before the market gets back to its all-time highs. The current 5.9% drop is relatively small for a pullback and it’s possible the market could drop another 5% or more over the coming weeks, and before it begins to climb. I view this pullback as a good opportunity to invest excess cash while the market is still significantly below the all-time highs.
This Friday fed chair Jerome Powell will speak at the economic symposium and this event could be a market mover. Over the last several years I noticed that this speech often had a big influence on the markets, and this year it has the possibility to increase the momentum of this downturn or act as a pivot point to reverse the market direction upwards once again.
Photograph by: Ben White on Unsplash
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