S&P 500 Signal: Has a Slight Start to the Week

The S&P 500 did very little during the trading session on Monday, as it looks like we are going to have a bit of a sluggish start to the week.

The S&P 500 was rather quiet during the open on Monday, as we continue to see a little hesitation. Ultimately, whether the market can continue to go higher remains to be seen but certainly, the is still very bullish. We are forming a little bit of a bully’s flag now, but we will have to wait and see whether we get the upward pressure to kick off that signal. As things stand right now, the 4500 level above continues to be a major resistance barrier and will attract a lot of attention. Obviously, if we can break above there it would be a very bullish site in the S&P 500 that would go much higher.

On the other hand, if we turn around and break down below the 4300 level, that opens significant selling pressure. As things stand right now, I think we are simply going back and forth and figuring out what to do with ourselves. We are in a roughly 200-point range and will continue to trade the market in this matter. The 50-Day EMA is racing toward that 4300 level, so that makes a certain amount of sense that it could offer support as well.

Position Sizing Will be Crucial

• Over the next week, we must worry about end-of-month rebalancing, so it does tend to be a little bit more bullish than bearish, especially the last trading day of the month, as managers will have to buy stocks that all their investors will expect to see.
• I would anticipate a lot of noisy behavior in the meantime, so you must keep in mind that you will need to be nimble and trade short-term changes.
• We still look like we favor the upside in general, but with this being the case I think we have a situation where position sizing will be crucial, since it’s going to be difficult to get this lean toward one direction, I would assume that pullbacks will be thought of as value opportunities.

Potential signal: Buying at this point makes a certain amount of sense, as we are heading towards the end of the month buying. This means that the 4300 level must hold, but if we do, it is likely that the next few days will see strength. I am aiming for the 4480 regions.

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