- There was a fair bit of value chasing throughout Tuesday's session, and the S&P 500 continues to experience a lot of "buying on the dips."
- In the end, Tuesday's session was essentially more of the same, as it has been for a while.
- In other words, we are hanging about in a massive trend, and the markets should continue to see more of the same over the longer term.
The S&P 500 Has Been Choppy
Over the past few days, the S&P 500 has been quite erratic and noisy, indicating that we are definitely searching for a reason to retreat in order to provide value. Since the market has been rising steadily for some time, I believe we have a good chance of maintaining the current trend, but we might need to retreat a little in order to uncover value. I would anticipate seeing a lot of buyers at the 5100 level, and then there's definitely the 5000 level after that, which I believe also enters into the picture to provide plenty of support, if only for psychological reasons. Put another way, there's really no way to short this market because traders are chasing performance, and this year is quickly turning into one of the strongest that I can recall in recent memory. The general upswing is that powerful.
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The 50-day EMA is probably going to stay supportive, and as it approaches the 5,000 mark, it's very likely going to provide some further uplifting energy. In any case, remember that the S&P 500 consists primarily of a small number of stocks. You must remember that the index is not equally weighted. When everything else is equal, traders still think that the Federal Reserve will intervene again and possibly lower interest rates, which has caused investors to purchase equities. This is how an extremely powerful uptrend appears when it is at a perfect 45-degree angle with respect to the trend, and it is unstoppable. Although I acknowledge that it would be a bit of a red flag, I would not be willing to sell this market anytime soon, even if we dropped below 5,000.
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