The market continues to pay close attention to the 4100 level, and then of course the 4200 level after that.
- The S&P 500 has been very noisy over the last couple of weeks, and there’s almost no chance that April is going to be any different.
- The choppiness is a good representation of all of the economic uncertainty that we have around the world, and therefore it should not be overly surprising to see that perhaps we may drift sideways more than anything else.
- However, I also recognize that there seems to be more hesitant to jump into the market with both feet, so I do think that the downside has more strength than the upside.
Another thing to keep in mind is that as we enter April, we are entering a timeframe in which companies cannot step into the market to buy their own shares, so there will be that artificial bottom. Furthermore, there are a lot of concerns when it comes to the global economy, and therefore I think you continue to see plenty of sellers willing to jump on the first signs of exhaustion.
The market continues to pay close attention to the 4100 level, and then of course the 4200 level after that. The market reaching that area does make a lot of short sellers interested, and therefore I think we will struggle to get above there. However, it must be said that if we were to break above the 4200 level, it could open the possibility of a bigger move to the upside, perhaps all the way to the 4400 level.
On the other hand, if we can break down below the 3800 level, then it’s likely that the S&P 500 breaks down quite significantly, perhaps sending the market all the way down to the 3600 level. The 3600 level was a major swing low, therefore if we can break down below that level, then it opens a freefall where the S&P 500 could collapse for a much bigger move.
All things being equal, I think this is a market that is more likely than not going to see a lot of choppiness over the next month, so I’m not necessarily looking for a meltdown. I do think that every time we rally, it does make a certain amount of sense that we continue to see hesitation to send this market higher anytime soon, especially if the Federal Reserve remains resilient with its tight monetary policy.