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Climbing market pauses for a breather.

Climbing market pauses for a breather.

August 23, 2022
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We saw the stock market slip modestly last week following a month of strong gains. Investors were anticipating a short term sell off, but views widely differ as to the expected severity of the downturn. Is this a small downturn as the market marches to new highs, or rather is this a continuation of the bear market with new lows to follow?

Of course no one knows, but there are ways to take advantage of this downturn without having the answer. If this is a relatively small downturn, the S&P 500 may find support around 4000 and I look to this price level as a very good buying opportunity. If this is a larger downturn the S&P 500 could drop to 3700 or lower, but I believe this is a less probable scenario.

Investing excess cash if the market goes down to 4000 offers a higher probability of long-term investment success as compared to waiting and hoping that the market will go even lower. Currently the S&P 500 is around 4140 and if the index drops to 4000 it could happen this week or the following.

Photograph by: Jukan Tateisi on Unsplash

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