After sinking to lows early on Monday, the S&P 500 suddenly reversed and finished with gains. Futures trading for the S&P 500 this morning have remained positive and the index is near 7,463.00.
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The S&P 500 has produced plenty of price action for speculators the past handful of weeks. Yesterday’s trading was a solid demonstration of the recent volatility. The S&P 500 opened with fast lows in futures trading and touched a depth of nearly 7,364.00, but by the close of yesterday’s cash market the index finished near 7,440. There was a gain yesterday in the cash S&P 500 of 1.18%.
Day traders who compare the S&P 500 to the Nasdaq 100 can see that values moves at a slower pace on the S&P 500. This may be a reason why more conservative traders tend to pursue the S&P 500 compared to the velocity of the Nasdaq 100. Yet, the S&P 500 is not tranquil by any measure and must be traded carefully too.
Reversals and Sentiment Shifts
Sentiment in the S&P 500 continues to shift swiftly, yesterday and today’s early gains on the futures side indicate that values will remain fast. The approaching holiday in the U.S and long weekend must be taken into consideration too. Optimism may be a feature that is preached to day traders in the coming days before the 4th of July holiday, but the previous weeks are a good reminder why it pays to remain realistic. The S&P 500 at this moment is trading around 7,463.00. Questioning the possibility of false hope is logical after the results from the past couple of weeks.
Choppiness has been a feature for day traders and a look at technical charts shows clearly why caution is needed. Large players seem to be in a speculative mood, and this may persist over the coming few days, but the ability of the S&P 500 to deliver moves lower recently should be used as a warning sign. Optimism may be a motivating driver today and tomorrow in the markets, but day traders should keep their targets realistic. The trend higher in the S&P 500 remains tactically correct, but with a conservative approach.
Noise Surrounding the Equities Markets
Recent moves lower last week and early yesterday have likely hurt some day traders. Price action has been vibrant and will remain that way over the next few days.
Traders need to remember the 4th of July will cause many large players to start disappearing later this week in order to celebrate a long holiday.
However, trading will certainly be seen and the S&P 500 will remain a storyline.
Day traders who want to bet on optimism over the short and near-term cannot be blamed, but they should make sure they are practicing solid risk tactics that cash out winnings before they disappear into air.
S&P 500 Short-Term Outlook:
Current Resistance: 7,470.00
Current Support: 7,450.00
High Target: 7,510.00
Low Target: 7,390.00
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