The S&P 500 fell initially during the trading session on Monday only to find buyers underneath. The 3800 level continues to be a bit of a magnet for price, so it is not a huge surprise that we are simply sitting here. We have seen the US dollar strengthen a bit during the trading session, and that has weighed upon the S&P 500 slightly. However, it is very likely that we will continue to find value hunters based upon what we have seen - not only over the last few weeks, but over the last 13 years. With quantitative easing and stimulus out there pumping the markets, it is very likely that this market will continue to look at it as a “must buy the dips” scenario.
The uptrend line underneath continues to offer support, and the 50-day EMA hanging around that same uptrend line suggests that we will see buyers as well. Even if we do pull back from here, I would be all over this market in that area. Furthermore, the 3600 level underneath could also offer quite a bit of support as well. The 3600 level for me is essentially going to be the “floor of the market”, as we should continue to see plenty of buyers.
Underneath, the 3600 level was the top of a major consolidation area that started at the 3200 level, which measures a total 400 points. The market breaking above the 3600 level kicked off a potential move to the 4000 level, so I still believe that we are very much likely going to be very choppy on the way higher. However, I still think that there are plenty of value hunters out there who will be willing to get involved, and we have been conditioned over the last 13 years for dips to be bought into due to the Federal Reserve and the US government stepping in and trying to inflate things. If we do break down below the 3600 level, then it is likely that we could go down towards the 200-day EMA underneath, which is closer to the 3350 handle, but I just do not see that happening anytime soon. In fact, I have no interest in shorting this market at all.