Volatility on the S&P 500 is visibly “compressing” according to technical analysts – BTIG writes that the index is literally “a stretched spring” and that the weekly Bollinger Bands are the narrowest since 2019, which often precedes a larger move in the coming weeks. The direction isn’t guaranteed by that alone, but BTIG has a rather positive outlook: if the market holds above the 7,000 level, it sees room up to roughly 7,200 in the coming months.
- Bollinger Bands are a technical indicator that measures volatility and the relative “expensiveness” of a price compared to its average. They’re mainly used to estimate whether the market is short-term overbought, oversold, or preparing for a larger move.
They also mention that in the short term large growth names – mega-caps and growth ETFs – can make sense: they’ve pulled back to the rising 200-day moving average and are holding support there for now, which some view as a “decent entry.” On the other hand, they warn about one weakness: software – if this part of the market doesn’t convincingly recover from the recent wobble, it could drag the entire index down.
Are you currently in “buy-the-dip” mode (mega-cap/growth), or do you prefer to wait for confirmation of a breakout above 7,000 – or perhaps for a fake-out and a better price?
I'm gradually adding to ETFs and individual stocks in small amounts and am mostly still waiting for a bigger dip.
Indices are moving sideways, so I’m looking for opportunities in individual stocks. You can find great prices there right now. When I applied Bollinger Bands to the S&P 500, the lower band is around 6,780 points and the upper band is just above 7,000. For the index to get out of them, there would have to be a really quick move. In recent weeks I also see it as accumulation ahead of the next move. I’d be inclined to lean toward a pullback (I think there’s room for the S&P 500 down to about 6,500 points), but the market mostly goes up, so I’m waiting.
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This year it’s probably best to look for individual stocks, because their performance will likely be better and the S&P 500 may hover around zero for the whole year.