- The S&P 500 E-mini contract continues to see negativity, as we have tested the 3600 level during the trading session on Monday.
- It does look like there is a certain amount of support in the region, so I think now we are more likely than not going to see the market try to bounce.
- That does not necessarily mean that I want to be a buyer of it, just that I recognize there is a little bit of support in this area.
Keep in mind that earnings season starts at the end of this week, and a lot of people will be paying close attention to guidance. After all, there are a lot of questions when it comes to the global economy right now, and therefore people will be trying to get a read as to what CEOs think out there. There are major macroeconomic problems, and I do think that will continue to be the big theme more than anything else.
Pay Attention to the Federal Reserve
Pay special attention to the interest rates in America, because if they begin to climb again, that will certainly work against the value of stocks overall. The S&P 500 is full of companies that do business around the world, so it’s not as if the S&P 500 operates in a vacuum. In other words, don’t forget to pay attention to other indices around the globe, because it can give you a bit of a “hands up” as to how the S&P 500 may behave for the session. The overall malaise that we see in stock markets around the world will almost certainly find its way in the United States from time to time, as we have seen over the last couple of weeks. The Federal Reserve has done everything it can to tell the market it’s going to crash demand, meaning that it’s going to stay very tight with its monetary policy.
In a tight monetary policy regime, stocks typically don’t do that well, especially in this modern age which is all about cheap money and has almost nothing to do with the actual economy. This is all about the Federal Reserve more than anything else, so keep that in mind. If they stay hawkish, the S&P 500 E-mini contract stays rather weak and brittle.
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