The S&P 500 is slightly lower this morning in early futures trading and is around the 7,388.00 mark, this after losing a bit of ground yesterday, but things in the index are not straight forward.
Speculators thinking about a wager on the S&P 500 today have a task ahead if they are going to take into consideration all the aspects effecting the index. Yesterday’s trading did see a slight loss of value, but the S&P 500 opened lower and hit the 7,350.00 vicinity early on Monday and then retested it a bit later. However, the S&P then staged a rally higher and touched the 7,430.00 realm, this before sparking a bit lower again. Things are complex in the markets.
Thursday’s apex highs in the S&P 500 challenged the 7,520.00 mark, and the selling that followed on Friday flirted with the 7,400.00 ratio. Yesterday’s additional selling early came on the heels of nervousness regarding the Iran situation and risking U.S bond yields. However, the final result in trading yesterday for the S&P 500 was not terrible as it finished within sight of Friday’s close – and that may be of interest to technical traders.
Correlations and Nervousness May Not Calculate
Some day traders will certainly look at the stronger selling seen on the Nasdaq 100 and try to equate the results into the numbers produced on the S&P 500 yesterday. Yes, the two indices are certainly related when it comes to risk taking and investment strategies in many ways, but the Nasdaq 100 and S&P 500 do not always run in the same directions. The record highs made by the S&P 500 are still in sight.
Day traders who are nervous about corporate earnings and higher bond yields may want to stay away from thinking about the S&P 500 today, but there may be enough support in the near-term that continues to create opportunities for the S&P 500 on the buy side. Perhaps the strides up will not be significant, and intraday results will definitely be choppy. But speculators need to understand the S&P 500 is treated differently than the Nasdaq 100 by big players.
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Near-Term Headwinds and a Path Forward
It is easy for day traders to look at the S&P 500 and say it has gained too much. And that there is a chance the index may go sideways for awhile or even sustain selling.
However, the buying surge on the S&P 500 seen since the end of March has been strong.
While the velocity upwards is unlikely to be matched, betting against the S&P 500 incrementally making gains may be a mistake.
Day traders should be careful about the near-term because there are certainly potential clouds on the horizon, but the idea of nibbling away with quick hitting trades that look for slight moves higher when support is tested may be a good idea.
S&P 500 Short-Term Outlook:
Current Resistance: 7,396.00
Current Support: 7,360.00
High Target: 7,425.00
Low Target: 7,340.00
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