Domistock Tools Used:
Assets charted: S&P 500 index (.SPX)
DomiStock has just downgraded SPY to “Loser” and that might just not be as a bad technical event as it seems. That’s because during positive mega cycles, it’s not uncommon for S&P to record corrections which are strong enough to cut its technical status to that of a “Loser”. When that happens it might just be a super sign that things have gone overextended to the negative side. This is exactly what happened last September when after a long period of having a “Winner” status S&P 500 got downgraded to a “Neutral” and eventually to a “Loser”. But that was a sign of extreme pessimism and was actually a good time to go long. However, when a security and let alone S&P 500 index, get downgraded from Winner to Loser in a relative short period of time, that means that market has gone through a shock and it’s going to need time to heal. And usually that marks a period of greater uncertainty, volatility and risk. Hence, a period where it’s better to turn to adopt a short or medium term strategy and avoid the long term ones.