The S&P 500 continues to see a range that traders are comfortable with, as we have been working off a lot of froth from the previous move.
S&P 500
The S&P 500 has been bumpy during the month of February as we continue to see a lot of questions asked about the U.S. economy, the Federal Reserve, and trade tariffs. During the month of February, we also had the earnings season kick off and that has caused a little bit of choppiness.
Quite frankly, I think what we have going on in this market right now is a market that is trying to work off the massive momentum that we had during a huge portion of the previous year. As we continue to bounce between the 6,800 level and the 7,000 level, it is like the market is coiling up like a spring and it would make a certain amount of sense that if and when we break out, it becomes a big move.
Technical Levels and Outlook
I think ultimately if we can break above the 7,000 level, that opens up the possibility of a move to the 7,200 level. If we were to break down below 6,750, then that could lead to a deeper correction perhaps down to the 6,500 level where the 50-week EMA resides.
Ultimately, I do think we have a situation where the stock market eventually goes higher. The question now is whether or not we continue to see a lot of back and forth and short-term pullbacks that we can take advantage of. Quite frankly, over the last couple of months, if you have been going back and forth in this market with a range-bound system, you probably have done quite well.
This is not something that can happen forever and I do think given enough time we do get that breakout. Everything on this chart and the way that people have been reacting to pullbacks suggests to me that there are plenty of buyers out there, and then I think it opens up the possibility of a significant breakout to the upside. Whether or not that happens in March remains to be seen, but the longer this goes on, the more likely it will be a big move.