S&P 500 Forecast: Limps into the Weekend

• The S&P 500 has done very little during the day on Friday, as we continue to see a lot of noisy behavior.
• Because of this, it looks as if the market is going to continue to bang around as we wait for the Federal Reserve next Wednesday.
• This is a bit fitting because we are between the 50-Day EMA and the 200-Day EMA as well.
• After all, those indicators are widely followed, so it typically means that we are going to see a lot of back-and-forth as so many people will be looking at the market.

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The market breaking down below the 3900 level in the E-mini contract could send this market lower, perhaps reaching down to the gap underneath it. The market is just as easily going to rise from here, and if we can break above the 200-Day EMA, we could go looking to the 4100 level. If we were to break above the 4100 level, then it’s likely that we could go looking to the 4200 level.

Volatility is Going to Disappear

You could also make an argument for a bit of an up-trending channel, so therefore it is worth noting that there is a lot of noise, but it is structured overall. Keep in mind that the Wednesday meeting at the Federal Reserve will give us an idea as to what monetary policy could be like going forward, so that will be worth paying attention to as well. It will obviously cause a lot of noise in the markets, as per usual. I believe now you get a situation where the markets will continue to pay close attention to the 10-year yield as well because they do tend to move in the opposite direction. Yields up, market down, and of course vice versa.

Volatility is going to absolutely disappear at the end of next week, so at that point, I think it’s probably going to be very difficult to make any real money trading market. In that environment, keeping your position size reasonably small is the only way to survive, because you may get a sudden announcement that since the market reeling, and Murphy’s law dictates that the move will be against you, as I am speaking from experience. Underneath, the market breaking down below that gap could open up a move to the 3600 level, and it’s probably worth noting that we are at a major downtrend line as well.

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