- The S&P 500 has fallen again during the day on Thursday, wiping out the gains of the last couple of days as we have seen a lot of volatility, to say the least.
- At this point, it looks as if the S&P 500 is going to test the 3800 level, which is a large, round, psychologically significant figure, and an area where we have seen a lot of previous resistance.
- That should offer support, but quite frankly I think we go lower. After all, we are in a longer-term downtrend, and it suggests that we are going to continue to try to go down to the 3600 level.
Rallies now will have to deal with the 50-Day EMA, near the 3900 level. The 3900 level is a large, round, psychologically significant figure that a lot of people pay attention to, and with the addition of that moving average, it’s very likely that we will continue to see a bit of psychological and technical resistance. Breaking above that would obviously be a victory, but keep in mind that the 200-Day EMA is sitting right at the 4000 level, which obviously attracts a lot of attention. Ultimately, the market will continue to be very volatile, especially as we run out of volume over the next couple of days.
I Have no Interest in Buying this Market
Rallies now will continue to offer shorting opportunities, and I do think that it is probably only a matter of time before we see some type of reactive selling pressure, especially if traders are out there trying to collect profits on massive, short positions throughout the year. Underneath, the 3600 level will be important, but we may drop all the way down to 3500 before we know it. After all, this is a market that has been butchered during most of the year, and probably continues to suffer at the hands of a lack of liquidity, and quite frankly a lack of risk appetite in general.
I have no interest in buying this market, at least not until we break above the 4100 level, something that would not only be very difficult to do but would also break above a major downtrend line that goes back quite some distance. We are in a downtrend, never forget that and trade accordingly.
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