- The S&P 500 has gone back and forth during the day on Wednesday, as we are hanging around the 200-Day EMA.
- Ultimately, this is a market that is trying to figure out what to do next, as we are all over the place near the consolidation area and perhaps more importantly the 4000 level.
- It’s likely that we have a situation where the market is going to try to get a handle on what the Federal Reserve is going to do next.
Speaking of the Federal Reserve, it’s worth noting that the FOMC meeting has come and gone, with the 50-basis point rate hike. That is completely expected, but Jerome Powell has stated that he believes that the Federal Reserve will have to stay “higher for longer.” That means that the market is going to have to deal with a tight Federal Reserve, but now we will start to focus on the problem at hand, which of course is the holidays.
Volume is Going to Fall Through the Floor
It looks like they are going to try to pad the books in the fabled “Santa Claus rally” as per usual because there are a lot of bad money managers out there that have lost a lot of money this year. To have an excuse to keep the clients’ money, they must show that they own all the proper assets. We could also look at the 4100 level as a barrier, which we have formed a little bit of a double top, and blowing through that opens the possibility of a move to the 4200 level.
On the other hand, we turn around to break down below the 50-Day EMA, then the bottom will fall out and this pair will go much lower. I do think the longer-term S&P 500 has some issues, but the next couple of days are probably going to be somewhat resilient since we have massive options expiration on Friday, which tends to make the market squirrelly. Once we get through this week, volume is going to fall through the floor, and we will enter a blackout. As well as a preannouncement period, both of which could be negative. Because of this, we have a situation where the market must make bigger decisions, but we may not get any true action until after the new year.
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