The S&P 500 went gone back and forth on Monday as we continue to hover near the all-time highs. In fact, earlier in the day we did in fact make a fresh, new all-time high, but now we have gone back and forth to show a little bit of hesitancy. That being said, the market is a bit stretched at this point in time, so I think a short-term pullback will probably be looked at as a potential buying opportunity from the traders around the world who continue to see the S&P 500 as the premier destination to put money to work.
The US continues to outperform most other markets, and I think that will be the norm going forward. With this being the case, I think that we are looking likely to see more “buy on the dips” type of behavior, and as a result I think the overall uptrend will continue. The 50-day EMA is at the 4450 handle and is rising. That should also be supportive, right along with the 4500 round figure. The market will continue to see a lot of noisy behavior, but at this point in time I would hope that you would have been taught not to ever short this market. The Federal Reserve will do everything it can to keep the market afloat, and although we have a lot of noise at the end of the week, it is very likely that the earnings season will continue to give us plenty of reasons to get long.
Looking at this chart, I do think that we will eventually go looking towards the 5000 handle, but it may take a while to get there. Regardless, I think it is much more likely that the market will fall towards the 4250 level, an area I see as massive support. It in fact, even if we break down below that lower level, I would still be a buyer of puts only, because at least at that point you can mitigate any type of significant risk to your account. The Great Financial Crisis was the last time markets were allowed to actually function as a price discovery mechanism, so as long as you understand that, you understand that you cannot nakedly short this market.
