Technical analysis of the S&P 500
The S&P 500 contract was slightly higher in futures markets on Monday, reaching the 50-day EMA. That being said, we also retreated from that to form a kind of shooting star. Regardless, I wouldn’t read too much into the candlestick, other than that it shows that just going straight up the air from here will be a little harder than some people imagined. With that in mind I think it’s probably only a matter of time before we sell out and honestly there isn’t much going on out there that tells me the market rally should continue.
One of the big reliefs was that bond yields have come down a bit, but eventually the market will start to come to terms with the fact that people are buying bonds for safety reasons, and that’s why yields are going down. In addition, we have to take care of various economic factors and none of them have changed for the better. Bear market rallies tend to be very vicious and I think we just saw that. If we reverse and break below the 4150 level I think the first selling opportunity will come. If we break below the 4100 level I think aggressive selling will occur at that point.
On the upside, the market could go all the way up to 4300 and structurally not much change. The 200-day EMA is slightly above and would come into the picture at this point. There is a bit of a “shelf” at the 4300 level of selling pressure that you can clearly see from a few weeks ago.
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