S&P 500 Forecast: Hovering Above the 50-Day EMA

• The S&P 500 has rallied slightly during the trading session on Wednesday as we are waiting to see what Jerome Powell has to say on Friday.
• This sets up Thursday as being a very lackluster day, and probably one that more likely than not is going to be better off avoided.
• If you are a short-term trader, then we probably have a nice range bound to set up for the day.

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The 200 Day EMA sits just below the 4200 level, and therefore I think it will offer a bit of the ceiling in the short term. Traders will more likely than not be a bit hesitant to get overly aggressive during the Thursday session, so I think at this point you’re probably going to be trading something along the lines of 15-minute charts. It’s likely that the market will continue to see Friday as the day that could set up the next move.

For myself, I will be placing a trade until Monday, because the day of the announcement and speech typically has a lot of noise. It’s not uncommon for Wall Street to run the market up in one direction, only to turn around the next trading day. This will be especially true if they have the entire weekend to “rethink their interpretation.”

Markets Waiting for Interest Rates

The 50-Day EMA underneath could offer support, and if we were to break down below the 50-Day EMA, then I think the market could unwind because the 4000 level will be challenged at that point. Anything below the 4000 level opens up a flight of selling. As far as getting bullish is concerned, I need to see a daily close above the most recent high, which is just above the 4300 level.

Take your time to pay attention to the interest rates coming out of the United States, because interest rates will directly counter what the stock market is going to do. Higher interest rates will drive the stock market lower, and vice versa. It appears to me that Wall Street is trying to convince itself that the Federal Reserve is willing to support it again, so the next couple of days should be rather important. Nonetheless, it’s astonishing to me how many people believe that the Fed will ultimately ride to their rescue.

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