- The S&P 500 was fairly bullish during the month of January, but it’s also been very noisy.
- This is not a huge surprise considering that we now have the Donald Trump administration at the reins of power in the United States, and this of course means that we will continue to see a lot of noisy volatility.
- However, there are a few things that we could pay close attention to in order to understand where we are going next, not the least of which would be the fact that we had been in a major uptrend for quite some time.
With this being the case at the moment, I believe that there are value hunters out there who are willingly involved.
Looking at this chart, I think you can look at the 5700 level as a significant support level, as it previously had been significant resistance. At the end of the month of January, we are hanging around the 6000 level, which of course is a large, round, psychologically significant figure. The 6000 level is a large, round, psychologically significant figure as well, and it would more likely than not attract a lot of options traders. Because of this, I think it will continue to be crucial to pay close attention to, but as things stand right now, I think that “buying on the dip” continues to be the case going forward.
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Alternatively, if we can break above the 6200 level, then it’s likely that the market could go much higher, and I do think it would just be a simple continuation of the overall trend. The trend has been very strong for quite some time, and that is something that you need to keep in mind. After all, markets tend to be creatures of habit and momentum, and although there are concerns about interest rates at the moment, the reality is that the US economy continues to strengthen, and by extension eventually the S&P 500 should as well.
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