- In recent trading sessions, the S&P 500 has been bouncing around in a 100-point range, with the 4100-level providing support and the 4200-level acting as a potential short-term ceiling.
- Breaking above the 4200 level would open the possibility of a move to the 4300 level, while breaking down below the 4100 level would bring the 50-Day EMA indicator into play and open a bigger move to the downside.
- The longer-term chart suggests that the market is consolidating between 3800 on the bottom and 4200 on the top, and as we are at the top and squeezing, the market appears to want to go higher.
- However, we are also during earnings season, and May 5 has Apple offering its earnings call, which is 7% of the S&P 500 itself.
Despite the market's desire to go higher, there are several potential issues that could cause problems, including the Federal Reserve statement and potential rate hike, as well as the upcoming jobs number. In the short term, the market is expected to continue to be choppy and noisy, with buyers coming back in to pick up the market. However, this is a short-term trade only, as we need to get through several important announcements over the next two weeks before we can have any type of clarity.
Volatility Ahead
In general, we expect to see a lot of volatility and therefore plenty of short-term trading opportunities. The market should be viewed through the prism of range-bound trading, but once the market breaks above the 4200 level, it will have clearly stated its intentions to go higher.
At the end of the day, the S&P 500 continues to be an important gauge of the US stock market, and investors and traders alike should pay close attention to its movements. While the market appears to want to go higher, there are several potential issues that could cause problems in the short term. As such, traders should be cautious and patient, waiting for important announcements to be made for the bigger companies before making any long-term trades. In the meantime, short-term movements will probably be the norm, and therefore you should temper your expectations for big trades. The short-term traders will love this environment, but swing traders will continue to be frustrated.
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