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S&P 500 Forecast: Wall Street Dances Around Earnings

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Ultimately, the S&P 500 exhibited early strength in Tuesday's trading session amidst ongoing market volatility. 

  • The S&P 500 exhibited early signs of strength in Tuesday's trading session, but it did so amidst ongoing market volatility.
  • It's essential to take note of the peculiar candlestick formation from the prior Monday's session—a doji, indicative of market indecision.

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An important technical indicator, the 200-day EMA, hovers above, drawing the attention of many market participants. If the S&P 500 manages to breach this level, it's highly likely that the market will set its sights on the 50-day EMA as the next target.

Conversely, a downward break below the low of the Monday session's candlestick could trigger a significant sell-off, potentially driving the index down to the 4200 level. Beyond that lies the 61.8% Fibonacci level, a key indicator closely monitored by technical traders. A breach below this level could prompt a wave of selling pressure, resulting in what's often referred to as "FOMO trading."

Should the index successfully surpass the 200-day EMA, a short-term recovery might be in the cards. This would likely attract more market participants, bolstering sentiment. However, it's important to acknowledge that the S&P 500 is currently characterized by a high degree of noise. This noise is exacerbated by the ongoing earnings season in New York, which wields a substantial influence over market dynamics. In essence, the market is navigating a day-to-day situation, making it challenging to establish substantial positions.

A Day-to-day Approach is Advisable

It's crucial to recognize that the market has been caught in a downward drift for a notable period. Consequently, rallies have been relatively constrained. A substantial move higher is contingent upon breaking above the 50-day EMA. In such a scenario, the market would adopt a significantly bullish stance, potentially paving the way for a climb to recent highs. While this isn't necessarily anticipated, it remains a plausible outcome.

Ultimately, the S&P 500 exhibited early strength in Tuesday's trading session amidst ongoing market volatility. The 200-day EMA stands as a significant technical indicator, and its breach could set the stage for a rally to the 50-day EMA. Conversely, a downward break may precipitate a sell-off, with the 4200 level and the 61.8% Fibonacci level serving as critical support zones. Given the current market noise and the influence of the earnings season, a day-to-day approach is advisable, with substantial positions requiring careful consideration. The potential for a more substantial rally hinges on a break above the 50-day EMA, offering a brighter outlook for the market's future.

S&P 500

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Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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