Every once in a while, when we are lucky, we experience a jolt. One of those situations where we don’t get hurt or suffer, but we are reminded how truly possible it is to get hurt or suffer. A near miss when driving, a disaster that strikes right where we just were.
And, when we are lucky, it is a wake up call that reminds us of the gravity of our choices and the cost of complacency.
Last weeks reaction to the potential rate hike in gains taxes is a good example. It was a good pinch to wake us up to the fact that the current market is fragile. This is not to say we shouldn’t continue to grab the gains this rally is spitting out, but it is definitely an eye opener.
Look at the S&P:
(scroll down for the chart)
We see support at the 10 day moving average, which is a great canary in the coal mine. If we do drop below that it isn’t a question of whether or not it is a correction, it is more of how far down will it go.
Til then, we have to watch closely and avoid the human tendancy to be oblivious to some of the most significant risks.
Keep learning and trade wisely,
Market Wealth Daily