The S&P 500 has been bullish during most of the month of June, and it’s possible that we may have a little bit of a cooling period for the month of July. While I don’t necessarily think that we are going to fall apart, I do think that it’s the situation that the market has gotten a little bit ahead of itself, especially when you talk about technology stocks. It’s probably worth noting that as we exit June, we are in a blackout period for corporate buybacks, so you do not have that added inflow.
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A lot will be riding on the US dollar and interest rates. While we have been melting up, the reality is that the market will continue to see a lot of noise more than anything else, and I think that a pullback toward the 4200 level makes a certain amount of sense. That was a previous resistance level, and we also have the 50-Week EMA racing toward that area, and it does suggest that the area should be rather massive support, was from a technical analysis standpoint and market memory. If we break down below there, then it’s possible that the market could drop to the 4000 level, but all things being equal I think we are more likely than not going to see more of a “buy on the dip” mentality.
However, be cognizant of the interest rate situation, because if interest rates continue to get very heated in the United States, that could very well beat up on the S&P 500.
- The Federal Reserve is suggesting to more interest rate hikes, but as things stand right now the economy is at least trying to cope with it.
- Employment will be a major factor as well, and the reality is that in the past we have seen recessions start like this.
- We have seen the market run up really fast, only to turn around and fall apart after reality smacks it in the face.
- Pay very close to that 4200 level, because if we break down below there things could get ugly.
On the other hand, we break above the 4500 level, then it’s likely that we could get looking to the 4800 level given enough time. As things stand right now, it would not surprise me at all to simply trade between 4200 underneath and 4500 above.
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