Pullback Accelerates

Today we saw the most important indexes pullback more than 1%. Reviewing the daily chart of the S&P 500, the index is no longer in overbought conditions, it closed right at the +1 Keltner Channel (KC) at 4,530. If the selling pressure stays under control, then the index shouldn't pullback to a level below the -1 KC, which currently is at 4,380 (orange arrow).

Comparing the top of the current rally on March/29 at 4,637.3 to the closing price today at 4530.41 the S&P 500 has had a pullback of 2.3% , still a very reasonable amount.

The numbers for the New Highs and New Lows (NH-NL) moved to a more neutral position, which is expected during a pullback. As long as the Monthly Lows (column H) don't get too elevated (more than 500) then the selling pressure will be still manageable and eventually the rally would have a chance to resume.

There are no guarantees in the Market, the fears of a recession, the Ukraine war, the virus, tensions with China, they are all news that at some point added selling pressure to the Markets and can continue to do so. If the S&P 500 breaks below the -1 KC and continues declining, risk management is the only tool we have in order to limit the damage to our accounts.