- The S&P 500 has rallied a bit during the trading session on Friday, even though the jobs number came in hotter than anticipated.
- After all, a lot of traders are worried about the Federal Reserve remaining very tight for a long time, but at the end of the day, the jobs under probably did not charge the outlook for the Federal Reserve in general.
- The 200-Day EMA sits just below, and then of course offers a significant amount of technical support as well.
If we were to break down below there, it opens the possibility of a move down to the 3950 level, which is where the 50-Day EMA sits. The 50-Day EMA is an indicator that a lot of people will pay attention to, so if we were to break down below there, then it opens the possibility of a move down to the gap underneath. The 3800 level is an area that a lot of people will be paying attention to as well, so that might be a target for short sellers. Anything below there would be very ugly indeed.
Waiting for a Short-Term Rally
Keep in mind that the S&P 500 must deal with the Federal Reserve meeting in December and of course any noise that it causes. We also must deal with the lack of volume later in the month, as traders will start to focus on the holidays instead of putting money to work. However, there’s also the “Santa Claus rally” that people will be looking at possibly happening, as it is when money managers put money to work late in the year to try to show clients that they own all the correct stocks.
At this point, certainly looks as if the S&P 500 is going to rally in the short term, and therefore I think you’ve got more of a “buy on the dip” mentality going forward, and I think that’s probably how you must look at this market. I don’t necessarily think you are looking for huge moves, just a significantly overall bullish attitude. Short-term choppy and bullish behavior probably opens the possibility of picking up a little bit of profit between now and the end of the year. I would not put much into my position size though, because this time of year can be quite dangerous.
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