- The S&P 500 displayed limited activity during Tuesday's early trading hours, reflecting an ongoing momentum within the context of a notably bullish market.
- After all, this market has “been on fire” for some time now. Even with this, there are times when the market will need to take a break.
Tuesday's market session for the S&P 500 unfolded quietly, with little notable movement. This subdued performance aligns with the absence of significant economic announcements. Currently, traders are engaged in a process of assessing the market's ability to sustain its gains, an endeavor marked by occasional pullbacks.
An important psychological benchmark for the market is the 5,000 level, which is expected to be a target. If the index reaches this milestone, it is likely to trigger profit-taking as traders grapple with the psychological implications of breaching such a round figure. In the event of short-term pullbacks, robust support has been observed around the 4,900 level, as evidenced over the past three sessions. Additionally, the 4,840 level, which served as a pullback point last week, offers another layer of support.
The future trajectory remains uncertain, and whether the market experiences a breakdown below current levels is yet to be determined. However, the presence of the 50-day Exponential Moving Average near the 4,700 level adds further technical support.
While the expectation is for the 5,000 level to be tested, it may not be breached immediately. The market may enter a range-bound phase, characterized by short-term buying opportunities during pullbacks. The S&P 500's performance is closely linked to the behavior of key constituents, including Tesla, Amazon, and others, commonly referred to as the "magnificent seven." The movements of these stocks exert a significant influence on the index, both upward and downward.
Overall, the S&P 500 is currently in a robust uptrend, and indications suggest this trend is likely to persist. This conviction is underscored by the anticipation of potential interest rate cuts by the Federal Reserve later in 2024. Consequently, while short-term fluctuations may occur, the broader trend remains bullish, reflecting the market's enduring optimism and resilience, waiting for those handouts from the Fed in the form of monetary policy. This has been the game since 2008, and will continue to be from what I see.
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