The S&P 500 initially pulled back in the futures market on Monday, only to turn around to reach the upside. The 4500 level underneath continues to be an area of interest, as it has been both support and resistance previously. We now look as if we are threatening the previous double top that sits at the 4585 level, which will be the last vestiges of resistance.
If we were to break above the double top at that level, it would have this market breaking to the upside, perhaps reaching all-time highs. Iif the bears cannot protect that area, it will come down to fundamental noise, which would have a long way to go in pushing this market back down. At this point, the Russians are even starting to soften their stance on demands for peace in Ukraine, so that could be yet another reason to think that things are turning around for a bigger move.
Regardless, even if we do continue to see upward mobility, the reality is that we are a bit stretched at this point, so it makes a certain amount of sense that we would get a little bit of a pullback. Underneath, near the 4450 area, there does seem to be a significant amount of support, not only based upon the previous several sessions but the fact that we have the 50-day EMA sitting there, as well as the uptrend line.
There is no such thing as an easy trade at this point, because the markets have been running on pure emotion for several weeks. Now that we have all but wiped out the concerns of the war in Ukraine stretching out across the border into other parts of Europe, we start to focus on the idea of economics. It appears that Wall Street no longer believes that the Federal Reserve has the guts to tighten the economy, but the Federal Reserve still maintains that it does. In this scenario, somebody’s going to lose, but right now it looks like the momentum is most decidedly to the upside. However, you should keep in mind that momentum seems to be a fickle thing and will continue to be a major issue at times. I think that as long as we stay above the support underneath, value hunters will continue to push the market.