- The S&P 500 has gone back and forth during the session on Tuesday as we continue to see a lot of volatility in general.
- The S&P 500 E-mini contract continues to be a place where we have seen quite a bit of noise, and I think that does continue to be a major problem.
- The 3600-level underneath should be a support level, but I think it’s just a short-term deal. We break down below there, then the market is likely to go down to the 3500 level.
Any break below the 3500 level could open the possibility of a huge drop lower. Ultimately, this is a market that I think will see a lot of back-and-forth but eventually a huge flush lower. The market is more likely than not going to try to rally a bit, but that rally should be a selling opportunity as well. After all, we have seen a lot of moves in the interest-rate space higher, I think that will continue to be the case going forward. The 3800 level above could be a bit of a ceiling, and most certainly be 4000 level would be, assuming that we could even get to that area.
Market Likely to Continue Going Lower
All things being equal, this is a market that I think will continue to see a lot of choppy behavior and could also make a serious attempt to turn things around and form a “double bottom”, but I think that will be short-lived at best. There’s no reason to believe that the market suddenly finds a reason to go higher based upon the tightening monetary policy and of course all the major external factors such as a slowing economy.
Yes, the United States is doing a bit better than many other economies, but the S&P 500 is chocked full of international companies, therefore even if the US were to be fine, the reality is that a lot of the world will not be, and therefore a lot of the customers won’t be there. Having said that, the question now is whether we are going to grind sideways and break down, or if we are going to rally before shorting it again? Those are you 2 options; I just don’t see how things change until the Federal Reserve dies.
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