The S&P 500 has gone back and forth during the course of the trading session on Tuesday as we see a lot of very noisy trading. As we are waiting for inflation numbers to come out on Wednesday, Tuesday was not much of a trading session. The 3850 level continues to be a little bit of a short-term magnet for the price, but I think the real action will be at the end of the day on Wednesday. Because of this, I would not be surprised at all to see very quiet trading until we get some more information.
Above, the 3900 level is an area that should offer resistance. The 3900 level could offer a certain amount of resistance, but if we could break above that, then it’s likely that we could try to challenge the 50 Day EMA which is just below the 4000 level. The 4000 level is also the scene of a gap, and of course, is a large, round, psychologically significant figure that people will need to pay attention to.
If we break above the 4000 level, then it’s possible that we could go to the 4200 level, but it’s going to take a hell of a Herculean effort to break above there. If we did, then it’s possible that we could see an opportunity to change the overall trend. I do not see that happening in this environment, so I continue to look for shorting opportunities.
If we break down below the 3800 level, it opens up the 3750 level rather quickly, and then possibly an opening to go down to the most recent low. At this point, we are still in a down-trending channel, and I think that will continue to be something worth paying attention to. Ultimately, as we head into a recession and a slowdown economically, it’s only a matter of time before the S&P 500 continues to sell-off. Ultimately, this is a market that I think will be volatile and choppy, so you need to be cautious with your position size. Ultimately, I think the only thing you can count on is that you will need to pay close attention to money management as well as trade management. If we do see a shot higher, it might be an opportunity to get short yet again.
