- The S&P 500 has shown itself to be somewhat bullish to kick off the week and that does make a certain amount of sense considering just how sold off we had gotten.
- Keep in mind that the S&P 500 continues to be rather held hostage to the idea of the Federal Reserve and what it's going to do with its monetary policy, and more importantly, whether or not it is going to loosen monetary policy.
We are in the midst of earnings season, so that could come into the picture as well, so also be aware of that. Regardless, I do think that value hunters are starting to come back in the S&P 500 index, and they will take advantage of this market being so cheap as it were with this.
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Value? Maybe.
I think you have to look at the S&P 500 through the prism of a value play. You also need to be aware of the fact that it could be very noisy and messy in the short term, so keep that in mind. With this, I like the idea of buying this dip, but I would not get massively overexposed at this point. After all, the market has been hammered quite recently, and therefore it is going to be somewhat tentative. The market breaking down below the lows of the Friday session would be extraordinarily negative and certainly send this market into a tailspin. I don't necessarily expect to see that, but it is something that you need to be aware of.
Ultimately, this is a market that I do think eventually takes off to the upside again, but we need to build a certain amount of confidence in the market that has clearly been shattered as of way. Furthermore, we also need to get through earning season and see a lot of good reports to get people excited about buying into the S&P 500 again. Keep in mind that the index has also seen a lot of underlying rotation from sector to sector, so that can somewhat make the index look worse than it really is.
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