Run for the Hills?
Igor Manukhov - Mar 04, 2025
Markets have been lousy lately, but we must be patient. For now, it still looks like just a short-term pullback.
After reaching an all-time high last week, markets have been selling off. It seems like investors are increasingly worried about the uncertainty coming from White House. Should we panic? I would say not yet. I hate to sound like a broken record, and I know that I recycled the chart below a few times already, but we are still in a longer-term uptrend.
Notice how the 30-week moving average price (blue line) is still trending upward. Until it starts declining, it is very risky to sell and turn bearish. Short-term price movements (black line) will fluctuate even within an uptrend, historically, when the black line (price) approaches the rising blue line (30-week moving average), price acceleration tends to follow.
Of course, this time could be different and that is why I have included another indicator at the bottom of the chart. It is called Relative Strength Index (RSI). It measures a strength of price movement, and its reading fluctuates between 0 and 100. Most of the time, it fluctuates between 30 and 70 reading. When RSI is at 70 or above, it is best not to buy and wait for price to pullback before buying. When RSI is near or below 30, it is best not to sell and wait for a price rebound. I have marked previous instances of RSI being near or below 30 with vertical green lines. As you can see, price tends to rebound from those levels.
So, even if it is different this time (I doubt that), I would recommend waiting for the price to rebound before considering selling anything (if you were going to). On the contrary, these conditions present great buying opportunities.
