The S&P 500 has had a very rough month of September but found itself supported at the 50-Week EMA. At this point, it’s going to be very interesting to see how this plays out, but we have broken a short-term trendline. As the market bounced the way it had at the 50-Week EMA, I suspect that it’s possible that the market could try to stabilize. The 4200 level underneath is an area that has been important multiple times, so it’s probably not a huge surprise that we have rallied from there. That being said, as long as we stay above the 4200 level, I suspect that this market remains in a consolidation phase.
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It is worth noting that the market is forming a little bit of a bullish flag, and we are testing the very bottom of it. This is why I believe that a break down below the 4200 level could send this market much lower, probably dropping 200 points rather quickly. This would more likely than not coincide with interest rates rising in the United States, as they have most of the month. It’s a little early to call some type of major breakdown, but underneath the 4200, we could see an acceleration of the downtrend. Keep in mind that the market will show a lot of uncertainty throughout the month, as we are getting ready to see Q3 earnings reports coming out, which will probably be one of the biggest drivers of the month of October.
- We think volatility continues, and it will more or less remain a short-term trading environment.
- The 4500 level above is a major resistance barrier, and therefore it does make a certain amount of sense that breaking above there would take a Herculean effort.
- We also have the previous uptrend line that I’ve marked on the chart, and that is worth paying attention to as well.
- In other words, I would not be surprised at all if by the end of the month we ended up being in the same 300 point range that we have been in, but keep an eye on those interest rates coming out of America, because that could be something that breaks the market.
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