The S&P 500 E-mini contract rallied significantly on Monday to show signs of life again, as we continue to consolidate. It looks as if the 3600 level is going to continue to be an area of support, therefore I think you should pay close attention to that area. It has shown itself to be very resilient over the last couple weeks, so I do think that it’s probably only a matter of time before we have to retest that area.
S&P 500 Technical Outlook Today
- If we were to break down below the 3600 level, then things could really start to pick up to the downside.
- The 3700 level is minor resistance, but the real fight will probably be closer to the 3800 level.
- The 50-Day EMA is sitting just above there and is dropping, so I do think it does offer a bit of a “soft ceiling” if we do rally.
Noisy Behavior Ahead
Regardless, you need to keep in mind that it is the start of earnings season, as we are starting to hear from Wall Street. At this point, the market is likely to continue to see a lot of noisy behavior, and therefore you need to be very cautious about your position sizing. I think we are in an environment that continues to be very choppy, and because of this you will need to be cautious about trying to put too much money to work on any one particular position.
Do not forget that we are in a downtrend, and that downtrend is there for a reason. After all, the market will have to think about whether or not the Federal Reserve is ever going to pivot anytime soon, which is not something that I expect to see. Because of this, Wall Street is in the midst of throwing a tantrum, because quite friendly most of those traders have no idea how to trade in this environment. The “Fed put” may not be there anymore, and if that’s going to be the case, I think you could see something rather ugly. Nonetheless, markets don’t crash all at once, and therefore I think this is a situation where you are more likely than not going to be fading rallies along the way. This market will continue to look at the 3600 level with great intent, but a break down below there has the floodgates opening.
Ready to trade our S&P 500 daily forecast? Here are the best CFD brokers to choose from.