The S&P 500 continues to see a lot of fighting in it, as the drops only seem to be bought at this point. With all of the noise, most people would assume the markets should be much more negative than they are.
S&P 500
The S&P 500 has bounced a bit after initially gapping lower at the open on Monday, as we continue to see the same areas coming into the picture and supporting the market. It’s the 7,600 level at this juncture that contains a lot of market memory, as it was previous resistance. We also have the 50-day EMA sitting right there.
As long as that's going to be the case, it makes a certain amount of sense that value hunters may have returned. It’s probably worth noting that, at one point, the 10-year yield jumped all the way to 5%, but it has since dropped 4.5 basis points. That’s a pretty big repudiation of yields.
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Earnings Didn’t Cause Any Harm Either
Furthermore, we also have to keep in mind that earnings season has been fairly decent for S&P 500 companies. The S&P 500 also continues to fight higher oil prices. In fact, between oil prices and rates, which are connected at the moment, the S&P 500's fight has been one of the more impressive things I’ve seen.
There is, I believe, a significant amount of support all the way down to the 7,500 level. It’s probably worth noting that the Federal Reserve has an interest rate decision on Wednesday that will be very influential. That interest rate decision is expected to produce a 25-basis-point rate hike, but the question is: what signal will the Federal Reserve give as far as its plans going forward?
Ultimately, this is a market that has weathered the storm no matter what has been thrown at it. That, in and of itself, gives me a certain amount of confidence and a bullish attitude.
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