- The S&P 500 has been very negative as of late, and it is worth noting that it was Labor Day in America, so it’s difficult to imagine a scenario where the market can read too much into the action on Friday other than the fact that there is some negativity attached to it.
- However, you need to keep in mind that the Friday candlestick does suggest where the market is concerned, nobody wanted to hold over the weekend.
- That tells you that there is a serious lack of confidence, and therefore it’s likely that the market is going to continue to sell off at the first signs of trouble.
When you look at the futures market, you can see that it was slightly positive in limited electronic trading on Monday, but it was not anything worth getting excited about. I think that the market will continue to see plenty of sellers after short-term rallies show signs of exhaustion, and I do think that it is probably only a matter of time before the S&P 500 breaks below the 3900 level and continues to go much lower.
Market Likely to Continue Struggling
If the market were to break down below the 3900 level, we could see the market drop down to the 3700 level. The 3700 level is a huge area of support, if we were to break down below there, then it’s likely that the market bottom will fall out, and we could go much lower. In the meantime, if we were to rally from here, the 50-Day EMA sits near the 4050 level and currently dropping lower. The 50-Day EMA is a technical indicator that a lot of people pay attention to, so would not be surprised. If we break above there, then the 200-Day EMA would be targeted near the 4200 level. In general, I believe that there are plenty of areas above that should continue to offer resistance in general. I will be looking for signs of exhaustion that I can start shortening. It’s not until the S&P 500 retakes the 200-Day EMA at the very least that I would consider buying this market. The other thing could be that the Federal Reserve changes its attitude, which of course would be a huge factor in pricing. I just don’t see that happening, so I do believe that this market continues to struggle.
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