The S&P 500 has tried to rally during the trading session on Wednesday, but as you can see gave up quite a bit of the gains as we continue to see resistance just above. I think the 3150 level is going to continue to be a bit difficult, but the real “hard ceiling” in the market is closer to the 3200 level. Breaking above that level would obviously be a very bullish sign, but in the short term it looks as if we are running out of strength, as we get back quite a bit of the gains during the trading session.
If we do pull back from here, I would anticipate that the 3000 level would be a bit of floor in the market, not to mention the fact that the 50 day EMA has just crossed above the 200 day EMA and is almost at that level right now. The market will continue to be very choppy and noisy, but as long as the Federal Reserve is out there lifting up the market, it is unlikely to fall for any significant amount of time. Granted, we just got the “golden cross”, but that is a lagging indicator and nonsense most of the time so I would not get overly excited about it.
If we do manage to break above the 3200 level, then it is likely to move towards the 3400 level, which is a large, round, psychologically significant figure. To the downside, if we do break down below the Monday candlestick then it could open up a move down to the 2800 level. 2800 is going to be massive support, so if we were to break down below there it is likely that the market will then move down to the 2600 level. However, I do not think that will happen anytime soon, and therefore I believe it is only a matter of time before the buyers return. Yes, the candlestick for the day on Wednesday is less than enthusiastic, but I think a pullback simply makes quite a bit of sense, and therefore that is all we are going to see, traders trying to get back involved and pick up a little bit of value. Besides all that, if the market does break down, there is so much noise between here and the bottom that it is going to be very difficult to short this market without some type of major event.