- Although traders did come back to work on Tuesday, the reality is that volume is very thin.
- The market initially fell to kick off the trading week, but then turned around to show signs of life again.
- It appears that the 3850 level is offering a little bit of a magnet for the price, but quite frankly would not read too much into the candlestick because most people are away for the holidays.
The 50-Day EMA sits in the 3900 level I could offer a little bit of the ceiling for the market, so keep that in mind as well. Ultimately, this is a situation where traders will continue to look at this through the prism of whether risk continues to climb for the year, or if we must wait till the jobs number comes out in January. I suspect it’s the latter of the two, so in the meantime, we make it a little bit of a slow and gentle lift, but I would not make too much out of that move. However, if we did break above the 3900 level, it doesn’t open the possibility of going to the 4000 level. Again, I would not make too much out of that, but I recognize this is a scenario where we have a lot of chopped just waiting to show up.
Looking to Fade Rallies
To the downside, if we break down below the hammer from last week it opens a move to attack the 3750 level, and then possibly the 3700 level. Anything underneath that would resume the nasty longer-term downtrend, which I do think eventually comes. However, hope burns eternal and I’m already hearing pundits on Wall Street try to convince themselves and everybody else of the Federal Reserve is going to come to save them.
At this point, Jerome Powell must feel like a disappointed parent. He keeps telling Wall Street that he’s not going to bail them out, and within hours of every time he makes that statement, somebody starts trying to pump stocks on the idea that Federal Reserve will have to pivot. He’s made it obvious that he feels more like Paul Volcker than Ben Bernanke, who quite frankly was the architect of a lot of these issues. The monetary system has been hijacked for a while by these liquidity issues, and that’s coming to an end. Fading rallies continue to be the way I look at this market.
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