I think what we are starting to see here is the market stepping back from the overly bullish tone, and simply trying to take a bit of a breather.
The S&P 500 had a somewhat neutral trading session on Friday, as we have been hanging around just above the 4500 level. The market is just shy of the all-time highs, and it is very likely that we could go looking towards the upside sometime next week. If we get a pullback from here, then I think ultimately there should be plenty of buyers underneath, especially near the 4500 level, and then the 50-day EMA underneath. The 50-day EMA is starting to curl higher, and that could be a reason for the buyers to come in and pick this market up.
The S&P 500 will continue to focus on earnings season, and the idea of the world opening up after the pandemic. As the US economy still sees plenty of demand, the S&P 500 has been a major beneficiary. Furthermore, even though we have seen interest rates in the United States rise, the reality is that the bond markets have absolutely no real return yet, because inflation is so high. The US dollar falling does help the idea of the S&P 500 going higher as well, so that continues to work in the favor of the bulls.
The last couple of candlesticks have all been relatively neutral, right at the previous highs. In other words, I think what we are starting to see here is the market stepping back from the overly bullish tone, and simply trying to take a bit of a breather. I do not necessarily believe that this is a market that you can short, but it would not surprise me at all to see a pullback appear as a simple function of the way markets tend to undulate. If the market were to pull back rather significantly, I believe that the 4250 level is the floor in the market, and an area where I think a lot of interest will be paid attention to due to the fact that the 200-day EMA is racing towards there. If we break down below there, then it is possible to be a buyer of puts, but that is essentially as negative as I get in this market due to the fact that the market is highly manipulated. Looking at this chart, it is very obvious that the market is in a bullish trend, so you do not fight it.