- The S&P 500 went back and forth during the course of the trading session on Thursday, as we continue to see the market try to sort out whether or not it wants to go higher or if it is going to consolidate.
- At this point in time, I think consolidation and a range bound market makes quite a bit of sense.
- After all, we have gotten far ahead of ourselves, and I think that the market has to work off a lot of fraud.
Federal Reserve
The Federal Reserve continues to see a lot of inflation out there, and as a result it’s possible that we may have to get used to the idea of no interest rate cuts between now and the end of the year. It’s possible that the Federal Reserve may not cut, but right now we are pricing in the idea of 2 interest-rate cuts. Remember, at one point we had anticipated that there would be 7 interest rate cuts. In other words, as long as inflation continues to be very sticky, it does make a certain amount of sense that we would see a lot of confusion at this point.
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Technical Analysis
It’s worth noting that the 50-Day EMA currently sits near the 5100 level and is rising. This could be a support level, and it’s also worth noting that it’s an area that we have seen a lot of action at in the past, so I think there’s a certain amount of “market memory” to think about in this vicinity. I think at this point, we continue to see a lot of “buy on the dip” behavior, and I think that will continue to be the key to trading this market.
If we were to break above the 5250 level, then it is possible that we could go looking to the 5300 level, and perhaps even beyond. All things being equal, the S&P 500 is a market that I have no interest in shorting, and I think the “floor in the market” is closer to the 5000 level. That’s a large, round, psychologically significant figure, and if we were to break through there, then it’s very likely that the market could have a massive selloff.
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