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I’ll be straight with you — we had a great bounce Tuesday that’s making my fresh buys look great, but we could still have more pain to the downside from here. That’s not exactly the opening you’d expect when someone tells you they’re buying, right?
But that’s exactly what I’ve been doing. I’ve started legging into long positions, even though my technical analysis points to 6,200 on the S&P 500 (SPX) as the level where we’re likely headed. In fact, 6,200 is still the number I have in mind and it lines up on the SPX and ES the same way.
We’re also in that point right now where it is potentially overextended in the fear mode, and that’s a big part of why I’m willing to take the other side.
When Fear Gets This Extreme, the Setup Changes
Here’s the thing about market bottoms — they do not ring a bell. And if you wait for perfect confirmation, you often miss the move entirely. Right now, we’re living in a news-based environment where sentiment has reached extreme fear levels.
You’ve probably heard Warren Buffett’s famous line about being greedy when others are fearful. Well, we’re at that point right now where it’s potentially overextended in the fear mode.
Though it took a big step back Tuesday on news of a potential deal coming in the war in Iran, the VIX tells that story clearly.
So yes, technically speaking, I still believe we could head to 6,200. But I also recognize we may not actually get there. That’s why I’m not waiting. I’m starting to position now, given the extreme readings we’re seeing.
Look, my buy may not be the exact bottom. It could be, or it might not be. I’m willing to accept that. If we do get to 6,200, it will not be fun for me — nobody enjoys watching their positions go red.
But I’m gonna try and hang in there and stick with it.
The More Cautious Approach
Now, if you’re not comfortable with that kind of uncertainty, I completely understand. If you want to wait and be more cautious, 6,200 is where I’d set up a dream portfolio situation. That’s the technical level with the strongest support — the spot where, if we get there, the risk-reward becomes even more favorable.
But here’s the reality: We’re never guaranteed to see that exact level. Markets reverse when they’re ready, not when our target lines say they should. And when you look ahead at historical patterns, there’s something interesting — over the three months following major geopolitical events, markets tend to flip.
That type of reversal behavior matters when you’re trying to understand what’s possible on the other side of fear-driven selling.
There’s also something worth noting from the seasonal data. We could be going lower over the next three months based on historical patterns. But we’ve never had three consecutive negative midterm years — and that’s the good news for those of us positioning for a turnaround.
On top of that, April is the best month for Energy (XLE) all year long, which is especially notable considering how hot the sector has already been. Seasonality does not guarantee anything, but it adds another layer to the broader setup.
So I’m taking a calculated risk here. I’m willing to accept the short-term pain because the setup — fear at extremes, technical support not far below, historical precedent that often leads to reversals and seasonal strength in key sectors — justifies starting to build a position.
This isn’t about timing the perfect bottom. It’s about recognizing when the odds shift in your favor and having the discipline to act, even when it’s uncomfortable.
And if you’re willing to wait it out in case it’s not the exact bottom, things can work out even better when the real flip happens.
Graham Lindman
Graham Lindman Trading
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