Potential signal:
If we close above 6800 on the daily chart, I am buying with a stop loss at the 6770 level, aiming for 7000.
The S&P 500 recovered strongly after an early drop below 6,800, showing continued bullish appetite. With firm support from the 50-day EMA and optimism about potential Fed rate cuts, the index appears poised to retest the 7,000 level.
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The S&P 500 fell initially during the trading session on Tuesday but broke down below the 6,800 level only to find plenty of buyers. Ultimately, this is a market that should continue to see a lot of volatility, but the fact that we almost immediately started to rally during New York’s normal session hours suggests that there is, in fact, a certain amount of appetite for stocks in the United States, as Wall Street definitely started to turn things around from the overnight session.
The 6800 Level
The 6,800 level, of course, is a large, round, psychologically significant figure that a lot of people will be watching very closely, as it was a previous resistance barrier. Furthermore, the market also has the 50-day EMA sitting underneath, and it is crawling along the uptrend line. Therefore, it does suggest that there is plenty of support underneath current trading levels.
After all, when we look at the chart, you have to understand that there are plenty of traders out there looking toward the end of the year and the potential interest rate cuts coming out of the Federal Reserve as a boost. And of course, you always have the so-called Santa Claus rally every year. I have no interest in shorting the S&P 500, and quite frankly, it will be all of the same usual stocks that push the S&P 500 to the upside as we continue to see the stock market move on just a handful of stocks.
Ultimately, you have to watch companies like Nvidia, Microsoft, Apple, Google, Amazon, Meta, and so forth. This is basically the reason that the S&P 500 moves almost identically to the NASDAQ 100, all things being equal. This is a market that I think goes looking to the highs again and eventually the 7,000 level if you are patient enough to simply let the overall trend continue.
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