The Bad news: as the market looks to break the 1867 technical support level today, the next support level is 1820. If the market breaks through the 1820 mark, the next spot is the mid to low 1700’s. That would be a full 20% down from the 2015 high.
The Good News: the US economy, without energy, is doing OK. The largest variable cost to many businesses is oil. Cheaper oil helps business margins. At 1820, the market would be trading at 13 times 2017 earnings which is below the historical averages.
If earnings come in as expected this year and next, and the market continues its downward bias, this would present a good buying opportunity in the markets.
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