It’s usually not a good idea to chase stocks higher into such conditions. So, I suggested folks who were looking to buy stocks might wait a few days before doing so.<\/p>\n
Today, while the market has pulled back slightly from last Friday’s overbought conditions, I still think folks will do better to wait a few more days before increasing exposure to the stock market.<\/p>\n
Take a look at this updated chart of the S&P 500…<\/p>\n
![\"\"](\"https:\/\/jc-stable.s3.amazonaws.com\/ee-assets\/channels\/articles\/mm\/201809-mm\/20180928-MM-01.png\")
<\/p>\n
The chart still shows a well-defined bearish rising wedge pattern (the red lines) with negative divergence on several technical indicators. Now, though, rather than bumping into the resistance line of the wedge, the S&P is struggling to hold above the support line.<\/p>\n
The index might be able to bounce from here. There’s still room inside the wedge for one more push higher. But, after yesterday’s last-hour selloff – where the S&P gave up more than half of the gains it had made earlier in the day – I’m not convinced the market has enough energy to put on much of a bounce from here.<\/p>\n
Instead, if the S&P breaks to the downside of the rising wedge pattern, we might see the market follow the path of the dashed blue line. The index could make a quick decline to where it started the month (2870-ish), then bounce a bit off of that level to relieve what would surely be some short-term oversold conditions. Then it could make another decline towards the 2825 level, which we listed last week<\/a> as a possible downside target.<\/p>\n As I’ve written before, it doesn’t have to play out this way. After the action this week, though, I like the potential for this pattern to play out.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n Editor’s note:<\/strong> Have you booked your ticket for the first-ever Legacy Investment Summit<\/a>? If not, you should decide soon… Sales end Sunday at midnight.<\/u><\/p>\n This is your chance to meet not just Jeff Clark, but other newsletter icons like Doug Casey, Bill Bonner, Teeka Tiwari, and many more… face to face.<\/p>\n Regular readers know Jeff doesn’t make many public appearances. He only speaks when he has something big to say. That’s why he’s headed to Bermuda this October – to unveil his newest trading strategies to the Legacy subscribers who attend. Learn how to join them here.<\/a><\/p>\n Do you agree with Jeff that it’s better to wait than buy into this market? Or do you think there’s a better way to play it?<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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