- The S&P 500 rallied a bit during the trading session on Friday, but I would also be remiss if I didn't point out the fact that we gave back about half the gains rather quickly.
- This is a market that's been consolidating for a while, and I think ultimately, you've got to look at that through the prism of digesting a big move to the upside.
- On short-term pullbacks, we should continue to see buyers, but I also recognize that the 5,700 level is still what I would consider to be the real floor in the market.
The 50-day EMA is reaching towards that area as well, so there is a certain amount of technical support to be had there. Over the next couple of weeks or maybe even months, I would anticipate that the market will eventually find the 6,000 level, but perhaps people are getting a little bit nervous around the election.
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The Headache that is the Election
The election in the United States is fairly tight, but depending on who you listen to, one candidate leads the other. The reality is that any negative reaction to the election will most certainly be turned around sooner or later anyway. This is a game that Wall Street plays every four years. The real problem that Wall Street seems to be dealing with at the moment is going to be the fact that interest rates continue to spike in the United States, and therefore, it does make buying a bond much more attractive than gambling in the stock market.
Furthermore, the earning season is currently going on, so that has a major influence on the S&P 500 as well and should only add to the volatility. Nonetheless, this is a big picture scenario of a case of trade which you see, not what you think or even are told. And right now, it looks like a market to me that has been rising for quite some time and there's really nothing here that suggests that we are suddenly going to fall apart.
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