The S&P 500 has rallied initially during the trading session on Wednesday, as we continue to see a lot of back and forth. Having said that though, the market has filled the gap from earlier in the week, so that was the technical necessity for traders. That being said though, if we can turn around a break above the 3300 level it’s likely that the market will continue further. To the downside, I see a significant amount of support in the neighborhood of 3250, and that of course the 3200 level. The 3200 level also features the 50 day EMA so that of course offers support.
Any bounce from that area should be a longer-term opportunity as well. If the market was to break down below the 3200 level then it opens up the possibility of reaching down to 3100, but I don’t think that happens anytime soon. The 200 day EMA underneath should continue to reach towards the 3100 level, and that of course is an area that people will pay attention to. At this point, the market has been going higher for quite some time and with the Federal Reserve stating on the sidelines it’s very likely that the stock markets will continue to pay attention to the balance sheet. Perhaps there is a little bit of disappointment due to the fact that the Federal Reserve didn’t explicitly suggest that the market could expect more asset purchases out of the Federal Reserve bit Jerome Powell did suggest that if they needed to, they could. If we can break above the top of the candlestick from the Wednesday session, that would be a very bullish sign and would flood the market with even more money. Ultimately, I don’t have any interest in shorting, at least not until we break down below the 3200 level significantly. Even then, I would be a little bit cautious, as it still would be technically in an uptrend until we break down below the 200 day EMA. Breaking down below there would send a lot of longer-term technical funds into the market to the downside and break this thing apart. Keep in mind that there was the Federal Reserve during the day, and of course we are in the middle of earnings season so that will continue to cause quite a bit of volatility. The US dollar will come into focus as well.
