Many times this year, we have said the next few days were going to be very important as to how the next few weeks were going to playout in the stock market. No, we have not been the “boy who cried wolf.” Most of those examples have indeed been important. Many times, the poor performance of the market at those “key junctures” has led to further declines in the stock market. Other times (like in late-January and mid-March), it was followed by nice rallies.
We’re facing another one of these “key junctures” once again this morning. We’ve seen a nice “set-up” for a further rally over the past two trading days…but we got some bad news last night that could throw a big wrench in the works……The “set-up” we’re talking about was the strong late-day bounce last Friday…that was followed by a strong rally yesterday (which included another late-day rally). All of this took place after the S&P had tested (and held) the important 3,800 support level that many technicians have been talking about recently. The fact that the market had acted quite well have a positive test of an important support level gave investors some hope that the tradable bounce that so many people were looking for a couple of weeks ago…was finally going to come to fruition (albeit from a much lower level).
HOWEVER, after the close last night, SNAP announced that it was cutting its revenue forecasts significantly. This has knocked the stock down by 30%...and is dragging down the shares of other social media stocks with it. The reasons for the slash in forecast had a familiar ring to it. They blamed rising inflation, supply chain issues, labor issues, the war in Ukraine, etc. In other words, the problems they are facing are not unique to ...
