S&P 500 Forecast: Index Makes Fresh New Highs

Christopher Lewis

At this point, sell-offs will simply continue to offer opportunities to get long.

 

Advertisement
Current volatility is making great stock trading opportunities - don't miss out!

The S&P 500 continues to chug higher as Wall Street celebrates the job losses. After all, the idea is that stimulus is going to come in and flood the markets again, and with the poor jobs number coming out on Friday, that only reinforces the idea that they will get the cheap money that they so desperately need. It has been 13 years, and every time there is the slightest hint of a serious breakdown, the Federal Reserve has stepped in to try to fill the market void. From a technical analysis standpoint, this looks like a market that is ready to go looking towards the 4000 level above.

The 4000 level is the measured move from the previous consolidation area that we had been in, between the 3200 level on the bottom and the 3600 level above it. The 400-point move extrapolated from the breakout does suggest that we are more than likely going to retest the 4000 level as well. With all of the momentum that has been pushed into this market via liquidity and, quite frankly, mania, it does make sense that we will continue to see money chasing that 4000 level above. In fact, it is a major option barrier that will attract a lot of attention as well.

To the downside, even if we break down below the 50-day EMA and the uptrend line, it is very likely that we would go looking towards the 3600 level. After that, the 200-day EMA comes into play as well. At this point, sell-offs will simply continue to offer opportunities to get long.

As a side note, we are seeing things like “Wall Street Bets” grab the headlines, and that tells me that we are getting towards the top. The biggest problem with timing these major bubbles breaking down is that they can last much longer than you anticipate. This is especially true considering that the Federal Reserve is back in it, but one has to wonder what happens when we finally get to the 4000 level? In the meantime, it is buy on the dips and continue to press the issue, as that is exactly what everybody else continues to do. I anticipate that any pullback is going to be very shallow in nature until we get some type of bigger catalyst. This is mainly driven on the hope of stimulus and a vaccine, both of which are still driving sentiment as we speak.

S&P 500 chart

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.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.