S&P 500 Forecast: Continues to Drift Lower

• The S&P 500 continues to drift lower overall, but it is worth noting that we fell apart during the overnight hours in electronic trading as Israel attacked Iran.
• However, we have noted that the attack has been much milder than people originally thought, and therefore is worth noting that the market is probably going to continue to see a lot of people out there willing to pick up the market on short-term dips.

It’s worth noting that the 5000 level continues to be an area that a lot of people are paying attention to, and when we broke down through there it looks very much like a situation where we could see a massive selloff. However, as we have turned around to rally, we are now starting to see people perhaps trying to jump out of the market due to the fact that they don’t want to hold onto risk assets heading into the weekend. Ultimately, this is a scenario where you just don’t know what’s going to happen over the next 48 hours, therefore you could find yourself dealing with a gap that goes against your position.

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Plenty of volatility

I think you are going to continue to see plenty of volatility, as the market is going to have a lot to deal with, not the least of which would be the earnings season which can typically because quite a bit of noise to begin with. With that being the case, I think it’s very likely that the S&P 500 continues to throw traders back and forth, perhaps causing headaches for a lot of you reading this. Nonetheless, I do think that it’s only a matter of time before buyer step in and try to pick up the market “on the cheap”, as we have seen multiple times in the past.

Ultimately, I am a buyer of dips, but I need to see a little bit of follow-through to the upside in order to get involved. If and when that happens, then I think we could go looking to the 50-Day EMA, and then possibly the 5100 level which sits just above there. After that, then we start to look toward reaching the recent all-time highs.

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