The S&P 500 roared to record highs on Wednesday. The equity index displayed significant strength in August and has started September with early bursts of buying hysteria via financial institutions. Stock indices in the US among the major exchanges remain robust. Speculators who believe they are capable of taking advantage of downward reversals which they are certain will develop may find themselves playing a dangerous and costly game.
Yesterday’s gains on the S&P 500 puts it within sight of the 3600.0 level. The index may appear overbought to many traders, but standing in front of the existing trend which has displayed a serious amount of strength should be reconsidered. Early calls on future markets this morning, indicate US equities may open with further gains. Although it is easy to contemplate the possibility that investors may take a breather after a positive start with September trading, speculators should also know the S&P 500 like other major indices tend to trade within their own rules of nature.
If a speculator is hesitant to join the party upwards on the S&P and first wants to see a slight pullback, that is understandable and a buy limit order below current market valuations near the 3575.0 mark may prove worthwhile. Short term support for the S&P 500 appears to be the 3557.0 level. However, these junctures listed must be looked at with a hint of skepticism because of the rather fast trading conditions the major indices in the US have produced. Experienced traders likely also believe the 3600.0 juncture up above is a target many investors will be aiming at near term. This value may prove difficult to attain if profit-taking emerges, but within the present market environment, this higher level may also be ready to be broken sooner rather than later.
The S&P 500 is enjoying a bull market. Conditions on the major US indices are positive and optimism is high that additional gains can be attained. While many analysts believe equities are overvalued within the current economic conditions, investment houses are proving that equity indices remain attractive and a place where they can seek better speculative returns with a limited amount of reputational risk. Meaning that if everyone is putting money into the likes of the S&P 500, money managers can simply say they are following the crowd and will continue to do so until the parade upwards concludes.
Speculators may be wise to simply piggyback on the trend and buy the S&P 500 and seek to take advantage of bullish buying sentiment. Yes, as always risk management is needed, proper leverage must be used, and stop losses need to be in place too.
S&P 500 Short Term Outlook:
Current Resistance: 3600.0
Current Support: 3557.0
High Target: 3620.0
Low Target: 3535.0
