The key level we need to be watching

Free After-Hours Analysis: 

The S&P 500 reclaimed nearly all of yesterday afternoon’s tumble after traders realized Trump’s threats to suspend stimulus negotiations were more bark than bite. Within hours, Trump backpedaled and promised to sign any bill that put money into voter’s taxpayer’s pockets.

This reversal alleviated investors’ fears and prices quickly returned to recent highs. And we should have seen this coming. Yesterday evening I wrote, “the dip might even turn out so modest and fleeting it could be hard to take advantage of.” Well, there you go. Blink and you missed it.

Tonight we have the vice presidential debate. If there is anything more inconsequential than the vice presidential debate, I can’t think of it. So yeah, expect investors to forget about this nearly as quickly as bored voters flip the channel.

The market continues trading well and has been above 3,300 support for nearly two weeks. If stocks were fragile and vulnerable, we would have crashed by now. Instead, September’s pullback is just that, a pullback. Nothing unusual or alarming about a step-back and cooling off following a 6 month, nearly non-stop run from the March lows.  Two-steps forward, one-step back.

Expect the sideways chop to continue until the election. But as long as we get more up than down, things are going well. If the index crashes back under 3,300, we will have to reevaluate, but until then, there is nothing to stress about. (This is our last-line-of-defense stop-loss. That said, a savvy and nimble trader will recognize looming weakness and get out long before the market reaches our last-line-of-defense.)

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