- The S&P 500 E-mini contract started selling off almost immediately during the trading session on Wednesday but turned around to show signs of life again.
- Quite frankly, it almost looks as if traders are still dealing with a lot of “Hopium”, which of course is the thought that the Federal Reserve is going to turn around and pivot due to weak economic numbers.
- They have already stepped out and said that they are nowhere near doing that, even though a couple of recent numbers have been missed.
Looking at this chart, it’s obvious that the 50-Day EMA is starting to approach the 3900 level, which is an area that has been important multiple times. I do believe that area should be rather important, so I’m looking at this through the prism of selling at higher levels. Quite frankly, nothing has changed from a fundamental standpoint, so I think at this point it’s only going to give us an opportunity to short from higher levels.
Global Economy Likely to Affect the S&P500
We are almost certainly will continue to see a lot of concerns when it comes to the global economy, and this of course will have a negative effect on the S&P 500. I think it is probably only a matter of time before we see sellers come back into the market, and therefore I think you got a situation where you are more likely than not going to see sellers overwhelmed. If we break down below the bottom of the candlestick from the hammer that is forming on Wednesday, that would be a very ugly turn of events. At that point, I think the market is likely to continue to see a lot of selling pressure.
The 3600-level underneath should be rather important, so giving that up would be horrible for this market. As far as buying is concerned, it would be a bit difficult to be overly confident at this point, at least not until we break above at least a 50-Day EMA. I have no interest in trying to “climb the wall of worry”, because nothing has changed, even though there are certain narratives flying around now. Don’t be surprised if we have a little bit more bullish pressure ahead of us but we also have the jobs number coming out on Friday.
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