- The S&P 500 has rallied a bit during the day on Thursday as we trade right back into the consolidation area we have been stuck in for well over a week.
- At this time of year, nobody is really trading the markets, so this makes a lot of sense that we would simply be going back and forth.
- Ultimately, think this is a situation where you are better off leaving it alone, but because I know so many of you won’t listen to me on this, I will give you my best assessment.
More likely than not, this is a market that is going to grind back and forth over the next couple of days, so if you are a short-term trader, this could be a nice environment for you. However, the biggest mistake you can make is loading up on huge positions. This is because an errant news flash or headline could send the market jumping 30 points against you before you know it. Remember, there aren’t that many participants out there. This means that the moves can be quite erratic and huge out of the blue. On the other hand, we may distantly bounce around in a 10-point range.
The market Will Drift Back and Forth
Keep in mind that on Friday, the markets will be quiet and then closing a bit early, as most Americans are worried about New Year’s Day. I understand that a lot of European traders go back and forth on the S&P 500 futures contracts and CFD markets, but the reality is that all the real volume comes out of New York. I think you probably got a dead market over the next couple of sessions, with an eye on the 50-Day EMA which sits at the 3900 level.
On the other hand, if we break down below the 3800 level, then it opens the possibility of 3700, followed by 3600, and then 3500. Obviously, it’s going to take some type of momentum to get the market moving in one direction or the other, and the next real fundamental news coming out will be late next week when it comes to the jobs number in America. Between now and then, I would anticipate that this market simply drifts back and forth looking for some type of liquidity to place positions from.
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