The S&P 500 fell again on Tuesday to show signs of weakness yet again. At this point, the market is likely to continue looking at the 3700 level as a potential short-term target. If we can break it down below there, and most certainly we will, the market will continue to go much lower. There is nothing on this chart that screams “I should be buying.” Unfortunately, my email account has been blown up by several people asking me what to do about massive losses, that got in “when the stock market looked cheap.”
The thing about assets that are cheap, is that they can get cheaper. (Just take a look at Ethereum as an example.) I do believe that it is probably only a matter of time before we do get some type of bounce, but that bounce will only be an opportunity for people who are stuck in horrible positions to get rid of them again. After all, this is a market that will continue to see a lot of reasons to fall, and although the 3700 level has offered a little bit of short-term support, quite frankly it’s likely that we will eventually see that level broken down.
That being said, the market is oversold at this point, so I think a bounce does make quite a bit of sense. That bounce should give us an opportunity to short this market again, and you should note that the Federal Reserve has a two-day meeting going on, so there could be statements or noise around the announcement that causes this market to go insane as well.
At this point, if we do rally from here, then it’s likely that we will see sellers get back into the market in order to take advantage of a short-selling opportunity. The 4100 level looks to be the ceiling right now, and with the 50 Day EMA breaking down below there, it's a matter of time before the sellers jump into this market. It is possible that we will get a little bit of a recovery due to the fact that the Federal Reserve does have that statement during the day on Wednesday, but do not be surprised if it gets sold into. There are whispered numbers of a three-quarter percent interest rate hike being announced.
