- The S&P 500 has done very little during the trading session on Wednesday, hanging around the 3950 level.
- This is a market that I think will continue to see a lot of noisy behavior, with the 3900 level underneath being a short-term support level. However, keep in mind that Thursday is Thanksgiving, so it does make quite a bit of sense that we would see a bit of lackluster trading.
- However, that does not mean that we won’t be able to have big moves. After all, a lack of liquidity can add quite a bit of momentum to trades that generally would not be highly influential.
The market has recovered quite nicely for a while, but at this point it’s starting to come to grips with the fact that the Federal Reserve may stay tighter for longer. Unfortunately, Federal Reserve speakers seem to be all over the place with the “hints” that they dropped to the market when their speaking. We do have the FOMC Meeting Minutes coming out later this week, so that could be a catalyst for some movement, but ultimately, I don’t necessarily think it’s going to be a lot of big money in the markets this week. Anything is possible.
Consolidation Ahead
Take a look to the upside, we have the 200-Day EMA sitting just above the 4000 level, which of course is a large, round, psychologically significant figure, and an area where you would suspect that there should be quite a bit of option barriers in the mix. At this point, I suspect it is probably only a matter of time before we must make a bigger move as we are squeezing between the 200-Day EMA and the 50-Day EMA, but it would not surprise me at all to see it not happen this week.
However, you should be aware of the fact that a lack of liquidity sometimes is accompanied by a major move so therefore huge positions at this point would not necessarily be advisable. After all, Murphy’s Law dictates that you will be on the wrong side of any trade like that. Ultimately, consolidation is probably what you would anticipate in this type of environment. You should also pay close attention to the US dollar, because of it starts to rally again, that can also be a bit of a barrier or the S&P 500.
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