If we could break above the 7000 level, the S&P 500 could take off to the upside for a 200 point move.
S&P 500
The S&P 500 initially pulled back just a bit in the early hours on Tuesday, but it looks like the 6800-level underneath offers a certain amount of support as we have been bouncing around in a range for a while, using that as the floor and 7000 as the ceiling.
We are hanging around the 50-day EMA as well, and of course we have to keep in mind that the market has been trapped for a while and eventually we should break out to the upside. If we could break above the 7000 level, then it opens up a move to the 7200-level based on the measured move, and I do think that happens eventually.
Earnings Season and Market Momentum
That being said, if we were to break down below the 6750 level, then you could see a complete collapse to the 200-day EMA for a short-term knee-jerk reaction. We are in the midst of an earnings season that will attract a lot of attention. For example, Nvidia is about to report earnings, and that obviously will have a major influence.
Ultimately, this is a market that probably looked to buy dips in, but I’m not looking for the world here. I think range-bound systems continue to be the way you trade this market as they simply don’t have enough momentum, but eventually it will.
We spent most of last year after the month of April going straight up in the air and that, I think, takes some time to get through. We've had a couple of months of very quiet trading, but it is worth noting that the buyers have defended quite well despite the fact that there have been a lot of negative headlines.