The S&P 500 is near 6,575.00 as of this morning with cautious trading being seen in futures markets. Yesterday’s start to the week started with nervous selling as analysts and algo systems worked with the knowledge the 200 day moving average for the S&P 500 had entered negative territory before going into the weekend. However, within the span of a quick interview President Trump caused a positive surge of buying as he spoke about the possibility of an agreement with Iran in the coming days.
But while the S&P 500 hit a high of nearly 6,707.00 upwards, this soon turned into suspicious consideration that not everything is well in the U.S equity markets. The Iranian war continues and has now entered its fourth week, while Trump spoke about a possible deal, facts in the sky – via military conflict – are still being heard. The S&P 500 cash market closed near 6,580.00 yesterday. This morning’s price action is hovering near this level as sentiment get tested with quick results.
Optimism is Good, But Realistic Outlooks Prevail
The S&P 500 was able to gain enough yesterday and sustain some of its highs that are keeping the index in sight of values traded on Thursday and Friday, this before the stark selloff and flirtation with lows around the 6,480.00 realm going into the weekend. While yesterday’s trading may have provided a brief optimistic wind for traders and large players, it appears financial institutions remain unconvinced about near-term direction and are cautious.
The S&P 500 in the meantime is likely to remain choppy until large buyers believe a better outlook exists which will allow them to justify pursuing the index. Until the S&P 500 shows sustained trading above the 6,700.00 level, negative sentiment should be treated with respect. While many day traders may feel the S&P 500 is oversold, betting on a substantial rise upwards remains tricky.
Difficult Near-Term Outlook as Rhetoric is Heard
The S&P 500 for short-term traders remains difficult. Without access to enough money to sustain positions while they are hit by volatility, the intraday swings of the S&P 500 will remain challenging.
The Iranian war is unlikely to come to a resounding conclusion in the coming days.
Traders need to be braced for more rhetoric from the U.S and Iran as they continue to clash.
Sentiment shifts may seem like they should not be such a huge factor for an equity index as big as the S&P 500, but are in fact affected by the gyrations of nervous emotions.
The near-term remains a gambling arena for day traders and the use of solid risk management essential.
S&P 500 Short-Term Outlook:
Current Resistance: 6,590.00
Current Support: 6,565.00
High Target: 6,640.00
Low Target: 6,480.00