S&P 500 Forecast: Bracing for a Slew of Data

We are currently sitting just above the 3950 level as I write this article, which is right in the middle of the overall consolidation.

  • The S&P 500 has been relatively quiet during the trading session on Wednesday, as we are bracing for a whole slew of economic influence via data and speeches.
  • Late on Wednesday, the Federal Reserve Chairman Jerome Powell will give a speech in front of the Brookings Institute that could cause some headlines, and then of course we have the Core PCE numbers coming out on Thursday which is the Federal Reserve’s favorite measure of inflation.
  • After that, on Friday morning we will have the jobs number coming out of the United States which always causes quite a bit of noise.

We are currently sitting just above the 3950 level as I write this article, which is right in the middle of the overall consolidation. The 200-Day EMA is close to the 4050 level, while the 50-Day EMA is near 3880. Ultimately, anytime you see the market between these 2 moving averages, you are susceptible to some type of squeeze, so I am very aware that over the next couple of days.

See Rallies as Selling Opportunities

If we can break out to the upside, we could open the door to a 4100 level, maybe even the 4200 level between now and the end of the year. On the other hand, if we break down below the 50-Day EMA, then we could very well drop down to 3800, maybe even 3700 by the end of the year. A lot of what’s going to happen next could be window dressing because the fabled “Santa Claus rally” quite often happens in December. This is when money managers try to buy all the correct assets to show their clients that they own all the “right stocks.” It’s complete nonsense and an accounting game, but it does happen during the back half of December in most years. It doesn’t have to happen, it’s just something that typically does.

If the Federal Reserve continues to look as if they are going to be extraordinarily tight with monetary policy, even if we do rally, I will anticipate that it will only end up being a nice selling opportunity. It’s worth noting that the S&P 500 has rallied about 15% in the last couple of weeks, so it’s probably due for a pullback regardless. Expect a lot of choppiness this week, but I would look at this through the prism of the range found market until we break out of these 2 moving averages.

S&P 500

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.