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The S&P 500 (SPY) is currently stuck in a range between 280 and 290. The fear of missing out is above 290. A break above 290 would very likely lead to a quick rally to 295-300. The panic is under 280. If the index loses 280, we will probably see a swift selloff to 270.
Trading in a range-bound market is not easy. It often requires playing the ranges which is counter-intuitive to many trend followers. Range-bound markets often come with a lot of choppiness, which means many false breakouts and breakdowns on the higher time frames.
Last week, we saw money flowing to sectors that are immune to the U.S. – China trade war. Enterprise software, restaurants, biotech showed notable relative strength. In a real market panic, none of those sectors will save you but as of now many money managers have chosen to hide there.
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