The S&P 500 has initially tried to rally during the trading session on Tuesday, showing signs of strength again but then gave back the gains to show a less than favorable candlestick. The fact that we formed a hammer during the Monday session followed by a shooting star at the Tuesday session tells me we are likely to see a bit of grinding sideways. This would make sense because we are approaching all-time highs and a lot of people will be a bit cautious. Nonetheless, I do not see any reason why this market does not break the all-time highs and continues to go higher, with a target of 3500.
To the downside, I anticipate that the 3200 level should show massive support, as not only has it shown itself to be supportive recently, but it is also the scene of the 50 day EMA. The 50 day EMA is followed by technical traders, so that is a reason to think that we may go higher. Ultimately, if we do break down below there then we have the massive 200 day EMA underneath there as well. Given enough time, the market is likely to see buyers come in based upon the liquidity measures, and quite frankly that is the only playbook that we have had on a consistent level for the last 12 years or so.
It may take several days to finally break the all-time high, but there will be a catalyst. It is hard to tell what it will be, but the markets are so highly manipulated at this point that shorting the markets is a great way to lose a lot of money. With the exception of the “temper tantrum” that the market threw back in February, this is a market that has always seem to be able to recover itself. Yes, I understand that fundamentals do not line up with the way the market behaves, but at the end of the day, you are paid to be on the right side of the market, not the right side of reality. Sometimes, and I would most certainly suggest right now is one of those times, the two have nothing to do with each other. This is one of the biggest problems newer traders are finding right now, due to the fact that everything they are taught about fundamentals have been thrown out the window.