- The S&P 500 initially rallied during Tuesday's trading session as the market braces for the Federal Reserve meeting on Wednesday.
- There are concerns about what the Federal Reserve will do and whether it will stay hawkish.
- Wall Street traders believe that liquidity and cheap money are the roads to higher stock prices, so a hawkish stance could cause problems for the stock market.
Currently, the 50-Day EMA sits at the 4100 regions, which should offer some support. Overall, this is still a market that remains "buy on the dips," unless the Federal Reserve takes drastic measures that negatively impact the market. However, the Federal Reserve has been known to play both sides of the fence, causing problems with their indecisiveness at times.
If the market breaks below the 4100 level, it could open a move down to the 4000 level. However, at this point, the market is still in the same consolidation range it has been in for a while. It's likely that the market will hang around in this area until it builds enough momentum to break out in one direction or the other.
Be Cautious
Once the market breaks out of the 100-point range, it could potentially move 100 points higher to the 4300 level or 100 points lower to the 4000 area. In the meantime, traders can expect a lot of volatility due to the Federal Reserve and European Central Bank meetings over the next two days, as well as the Friday Non-Farm Payroll announcement.
It's also crucial to stay informed and keep an eye on any developments that could impact the market. This includes not only the Federal Reserve meeting but also any economic indicators or geopolitical events that could affect the stock market. After all, there are still concerns about Russia, Ukraine, inflation, global growth, and so many other things. Also, we are during earnings season.
TLDR, the S&P 500 initially rallied during Tuesday's trading session, but the market remains uncertain as traders brace for the Federal Reserve meeting on Wednesday. It's essential to exercise caution and have a solid risk management strategy in place during this period of volatility. Breaking below the 4100 level could open up a move down to the 4000 level while breaking out of the 100-point range could lead to a move higher to the 4300 level or lower to the 4000 area.
Ready to trade the Forex S&P 500? We’ve made a list of the best CFD brokers worth trading with.