- The S&P 500 has rallied a bit during the trading session on Monday to kick off the week on the right foot again.
- We are now looking toward the 4100 level as a potential short-term target, and anything above there would almost certainly have the market looking at the 4200 level next.
- The 4200 level has offered a lot of resistance previously, so I do think it’s probably going to be difficult to get above there.
- Furthermore, the one thing that we do know so far is that there are a lot of concerns when it comes to the US economy, so how long this market can rally remains up for debate.
Quite frankly, if you keep an eye on interest rates in America, just expect that there would be the opposite reaction in the stock market. We’re keyed very directly into the bond market and what rates are going. If rates go higher, stocks go lower. If rates go lower, then stocks go higher. At this point, it’s all about whether the Federal Reserve can continue to fight inflation longer than expected. After all, Wall Street seems to think that the Federal Reserve will turn around and bail them out, which they probably have a right to considering that’s exactly what the Federal Reserve has done for 14 years. That being said, this is a monster of the Federal Reserve’s making, so it’s known something that they have to clean up.
Noise Ahead
Underneath, we have the 50-Day EMA and the 200-Day EMA hanging around the 4000 level and flattening out. This suggests that perhaps we may be entering a bit of consolidation, but I do think that if we fall from here, it’s likely that we could see that area offer support on any pullback. If we break down below there, then we could get a move back down to the 3900 level. That would also coincide nicely with the previous downtrend line from the former channel that we had been in, so it all comes together quite nicely.
At this point, the only thing I think that you can count on is going to be a lot of noisy behavior, so keep that in mind and keep your position size reasonable as there is still a lot of volatility out there, and of course more than anything else, uncertainty.
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