The S&P 500 Index had a quiet trading session on Tuesday, hanging around the 4000 level. The 50-Day EMA and the 200-Day EMA are here as well, indicating that the market is in a consolidation phase. The market is looking for a catalyst to get moving, as it seems to be stuck between two realities. The economy is falling apart in the United States, but Wall Street still believes that the Federal Reserve will come and bail them all out. This has led to both positive and negative spins in the market, and it appears somewhat frozen.
S&P 500 Bullish and Bearish Scenarios
- The 3900 level underneath should be considered significant support, while the 4100 level above could offer a sign of significant resistance.
- If the market rallies above the 4100 level, it could open up the possibility of a move to the 4200 level.
- Breaking above there would be a major bullish sign and could send the market racing to the upside.
- On the other hand, breaking down below the 3900 level could send the market down to the 3800 level, which would be extraordinarily negative and send the market much lower.
However, it seems that the market is stuck in roughly 200 points worth of consolidation. With the 50-Day EMA and the 200-Day EMA going sideways, it suggests that the market has no real interest in making a big move. As a result, traders should be looking at this through the prism of a range-bound market, using a range-bound type of trading system, perhaps something using the stochastic oscillator.
Ultimately, the market needs to see some type of fundamental reason to get moving. As the blackout period is coming soon, meaning that companies will not be able to buy back their own stock in order to lift prices, and earnings season is likely to be ugly, the market is likely to stay in a consolidation phase for a while longer.
The S&P 500 had a quiet trading session on Tuesday, indicating that the market is in a consolidation phase. The market is looking for a catalyst to get moving, as it seems to be stuck between two realities. The 3900 level underneath should be considered significant support, while the 4100 level above could offer a sign of significant resistance. Traders should be looking at this through the prism of a range-bound market, using a range-bound type of trading system. Ultimately, the market needs to see some type of fundamental reason to get moving, and as earnings season approaches, it is likely that the market will continue to stay in a consolidation phase.
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