- The S&P 500 has been slightly positive during the Friday session, but Monday will have had the underlying index close.
- The 3800 level looks to be offering a bit of support so that is something worth paying attention to, but I think at the end of the day it is probably a minor level.
- In fact, would not surprise me at all to see the market break down below the 3800 level, but it does look like we have a little bit of a bounce in the short time just waiting to happen.
The 50-Day EMA is just above the 3900 level, and it should offer a certain amount of psychological and technical resistance. If we can break above there, then the market could rally all the way to the 4000 level, which is roughly where the 200-Day EMA sits. Keep in mind that although I am very bearish of the stock market in general, a move like that does make a certain amount of sense since there will be a lack of liquidity and people will be out there trying to make up for poor performance so far this year.
Market Probably Will Consolidate
Ultimately, the market will probably try to consolidate in this general vicinity, perhaps with a slightly upward bias, but keep in mind that the market also must wait for the jobs number during the first week of January, and I think that will be your next major catalyst. After all, the economic picture around the world is not very stringent or strong, and therefore one would think that an earnings recession is on its way. I would also point out that some of the major economies around the world are struggling. For example, China is dealing with 37 million new pandemic cases each day. This is not conducive to a strong supply chain and global economy.
While I do think that there will be the hope rally occasionally, and I’m already starting to hear pundits talk about how the Federal Reserve is going to “have to pivot”, we will get these occasional nonsense rallies that get squashed again. Be aware of these but recognize that all the real money is been made to the downside all year, and nothing has actually changed from a fundamental standpoint, as hope is not a strategy.
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