- The last few sessions have seen a lot of activity on the S&P 500, and it appears that the markets will finally attempt to break out.
- Having said that, I believe that this market will remain, as it has for some time, primarily focused on passive investment flows.
The SP 500 Continues to Look North of Here
In the overnight electronic trading session on Friday, the S&P 500 saw an early rally. But it appears that more purchasers are willing to step in as the cash market grows. 5100 is now practically guaranteed. However, it's also important to note that we've broken out of a recent consolidation, and the 5,000 level is now below us, and I think this will act as a little price pivot. It does make some sense, given that it was situated in the center of the previous consolidation zone, that people will be paying particular attention to it as a result of market memory. The 4900 level, the 50-day EMA, and the 4800 level below it might all provide strong support even if we were to collapse below that level.
Wall Street traders anticipate that the Federal Reserve will reduce interest rates sooner rather than later, and they are beginning to see indications from other nations that inflation is being forcefully resisted. Of course, the most recent one occurred in Canada, and while it has no direct bearing on stock market events, it does provide some insight into potential worldwide trends. if inflation is under control and if the Federal Reserve can feel confident enough to lower rates will be the key questions at this point.
Ironically, one of the main issues they might have is that Wall Street is currently acting so aggressively that they are also increasing inflationary headwinds by raising asset prices. To put it mildly, this year is going to be really peculiar. Nevertheless, because this market is so powerful and steadily rising, you will be purchasing each dip in the interim. Afterall, the market seems to be stuck in some kind of “feedback loop” at the moment, and I don’t see how that changes in this environment. The market will continue to reach for excesses, before causing as much pain as possible to as many people as possible.
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