S&P 500 Forecast: Hanging Around Tight Range - 8 January 2020

The S&P 500 did almost nothing during the trading session on Tuesday, as we are heading towards a Non-Farm Payroll Friday. At this point, the market looks very likely to simply kill time between now and Friday, especially considering that there are so many potential headlines out there that could cause some major issues. After all we have the Americans and the Iranians bickering, and of course the Chinese have just noted that they may not be buying as many grains as initially thought. The question at this point would be whether or not that puts the trade deal in jeopardy.

At this point it’s very likely that we will continue to see a lot of back and forth, and most certainly a lot of caution. Traders are just now starting to come back from the holidays and with the jobs number coming out on Friday it’s likely that the markets will be relatively quiet unless we get some type of headline. The jobs number of course will attract a lot of attention, and then kick off the year as traders will start to put money to work the following Monday. Between now and then, it’s very likely that the market could pull back a little bit, but there should be plenty of support at the 3200 level. Even if we were to break down below there is very likely that the 3150 level will cause a lot of support as well, not only due to the fact that it was a previous resistance barrier, but it is also where the 50 day EMA is currently hanging around.

We have been in an uptrend for quite some time so I think it’s can it take something rather negative to change anything from the longer-term standpoint, but we are going to be vulnerable to the occasional headline between now and the jobs figure. Those should be buying opportunities though, because of the resiliency that we have seen more than once over the last several years when it comes to the longer-term uptrend. The markets continue to pay attention to the Federal Reserve more than anything else, and the Federal Reserve will more than likely continue to be as accommodating as necessary. The closer we get to the 3150 level, the more likely I would jump in with a larger position. In the meantime, any pullback looks like it will probably be a short-term buying opportunity.

SP 500

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.