- The S&P 500 has pulled back against the previous shot higher and at a very important level.
- The 200-Day EMA has attracted a lot of selling pressure, especially as it was right at the 4000 level, and of course right where the downtrend line coincided with everything.
- We are still between the 200-Day EMA in the 50-Day EMA indicators, which is typically when you see the market squeeze in one direction or the other.
- The candlestick is rather rough looking, so we will have to wait and see how this all plays out.
If we do break down below the 50-Day EMA, it’s likely that we can break down significantly, perhaps reaching down to the 3800 level. Breaking below the 3800 level then allows the market to break down rather significantly, perhaps reaching down to the 3700 level. On the other hand, if we were to turn around and take out the downtrend line, then it’s possible that we could go looking to reach the 4100 level above, which of course is an area where you would anticipate seeing a lot of noise. Anything above there could open this market to much more significant buying pressure.
Noise and Choppiness Ahead
I would expect quite a bit of noisy and choppy behavior, as the market will continue to see a lot of people screeching in both directions. The Federal Reserve continues to say everything it can to the market to keep it looking at tighter monetary policy, and yet another central bank governor from the Federal Reserve has stepped out during the day to say more interest rate hikes are necessary. However, it’s been quite interesting to watch Wall Street come up with every narrative it can to keep things going.
At this point, it looks as if we probably are going to fail at this trend again, but we are during earning seasons I suppose anything is possible. The market is also bracing for a slew of bad earnings, so perhaps the fact that we went down on bad economic news due to PPI in the morning might signify that the market is starting to pay attention to the economy. Stranger things have happened I suppose, so that might be worth keeping an eye on as well.
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