- The S&P 500 has fallen hard during the trading session on Monday, as traders came back to a bit of a mess.
- Interest rates rising weight upon the idea of risk appetite, as the market sliced through the 200-Day EMA.
- It also managed to break down below the bottom of the hammer from the previous session, so that of course is a somewhat negative sign as well.
All things being equal, this is a market that continues to be noisy, but at the end of the day, we have a lot of things going on that could cause problems. The markets will continue to be very noisy as we continue to see a lot of questions asked about the economy. We have a situation where you must look at this through the prism of the economy slowing down, and that certainly will cause a major issue when it comes to some companies trying to earn.
Pay Attention to the FED
Ultimately, I think we need to pay close attention to the Federal Reserve and what is going on there next week, as we have a major interest rate decision, and perhaps more important, we have a statement that will come along with it. Most people believe that it is going to raise interest rates by 50 basis points, so the actual rate hike itself probably won’t be a huge surprise. However, the attitude of the Federal Reserve remains to be seen. After all, they seem to think that rates will need to be higher for longer than Wall Street does. If we break down below the 3900 level, that might be a sign that Wall Street finally has gotten the signal.
On the upside, the 4100 level has offered a significant amount of resistance, and if we can clear that level, then we could go looking to the 4200 level, followed by the crucial and structurally important 4300 level. Ultimately, this is a situation where I think we must pull back a bit, but I don’t necessarily think this is the beginning of some type of massive meltdown. We have gotten a little ahead of ourselves, so it’ll be interesting to see how things play out over the next couple of days, but I think we are going to be somewhat sideways and choppy.
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