- The S&P 500 bounced a bit during the trading session on Wednesday, to reach the 50-Day EMA.
- This is not a huge surprise, because quite frankly the market was oversold. With that being the case, it does make quite a bit of sense that we would see a little bit of a recovery and I do think that the 50-Day EMA will continue to be a bit of a barrier.
- Ultimately, I do think that we have a situation where the market is just simply trying to get back to some type of equilibrium, and of course, traders are willing to take profit and head into the holiday week.
I’m looking for signs of exhaustion that I can start shorting, and while I am keeping an eye on the market, I am not necessarily trading very often. I do think that the last week or so has shown us the way, as we have failed at a major downtrend line, and then plunged below the 50-Day EMA. It is more likely than not we will continue to see more of that behavior, so I think we’ve got a situation where you are probably going to see the markets struggle with anything remotely positive.
I Have no Interest in Buying the Market
If we break down below the lows of Tuesday, that means that we could break down through the 3800 level. Breaking through the 3800 level ovens of the possibility of dropping another 200 points, to reach the lows that were made earlier this fall. I think now, the market looks as if it’s going to have to prove itself if it wants to go bullish, and Jerome Powell continues to do everything he can to reiterate the wherewithal to go ahead and keep rates higher for longer.
In fact, it’s probably worth noting that this is a market that must deal with tightening monetary policy around the world, so it’s difficult to imagine that we do not head into an “earnings recession”, which has yet to be completely priced into the market. At this point, waiting to see whether we get some type of exhaustion near the 50-Day EMA that I can start to take advantage of. I have absolutely no interest in buying the market at this time of the year, especially as we could see a complete turnaround rather quickly.
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