S&P 500 Technical Analysis
The S&P 500 E-mini contract initially pulled back against the buyers on Monday, but then turned around to show signs of life. At this point, it looks like we’re going to try to get back to the 4200 level, which I think is major resistance. However, if we were to turn around and break down below the Friday candlestick, then it’s likely that we could drop down to the 200-Day EMA, which is sitting near the psychologically important 4000 level. If we were to break down below there, then it’s likely that we could go much lower. At this point, the market probably looks to the $3900 level.
All things being equal, a lot of this comes down to the risk appetite of traders around the world, and as long as they are willing to chase profits, it’s very likely that the S&P 500 E-mini contract will go right along with it. After all, we are in the midst of earnings season so therefore a lot of people will be questioning whether or not it is time to get overly aggressive, and of course we have the Federal Reserve which is tight with monetary policy.
With that being said, I do expect to see a lot of noisy behavior, and therefore you need to be cautious with your position sizing. Nonetheless, this is a market that I think has a lot of questions out there, so therefore it’s likely that we will see choppy behavior and the occasional back and forth. Range bound short-term trading is more likely what we are going to see than anything else. The 50-Day EMA is getting ready to cross above the 200-Day EMA, which of course is the so-called “golden cross”, which attract a lot of attention as well.
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