- In the pre-market futures session on Wednesday, the S&P 500 displayed a modest rally, signaling an ongoing quest for solid support levels, primarily near the 50-day Exponential Moving Average and a well-defined uptrend line etched on the chart.
- These key technical markers serve as crucial points of reference as the market treads cautiously in its journey.
- This market is still in an uptrend, so it suggests it will only be a matter of time before there is a new narrative to get buyers into it.
All things considered; the prevailing trajectory appears to align with a rising wedge pattern. However, it's important to underscore that a breakdown below Tuesday's session lows could potentially alter this course of action, introducing an element of uncertainty. This could send the market into a lot of trouble, but it is more likely than not, that Powell will do whatever he can to make sure Wall Street doesn’t have to suffer much in the way of losses.
Should the market indeed breach the bottom of Tuesday's session, the prospect of a descent to the 4400 level comes into play. Conversely, a reversal and a breakout above the high set by Tuesday's hammer candlestick may open the door to an ascent toward the upper boundary of the wedge. Despite the potential for upward pressure, traders must be mindful of looming volatility, driven primarily by the Federal Open Market Committee (FOMC) meeting and, perhaps even more notably, the subsequent press conference.
Be Prudent
Given these circumstances, exercising caution is paramount. Position sizes should remain reasonable to mitigate risks in a market characterized by pronounced fluctuations. As the market scrutinizes the FOMC's statement and, more critically, the press conference that follows, the nuanced sentiments will play a pivotal role in determining market direction. While the interest rate decision itself may not register as a significant event, the possibility of an unexpected interest rate hike by the FOMC could indeed disrupt the status quo and trigger a market upheaval.
In the end, the S&P 500 embarks on a journey marked by heightened volatility, with its course hinging on key technical levels and the outcome of the FOMC meeting. The "buy on the dips" strategy remains relevant, as Wall Street traders are adept at identifying narratives that drive stock purchases. In this environment, adaptability, vigilance, and prudent risk management are indispensable as investors navigate the dynamic ebb and flow of the financial markets.
