- The S&P 500 fell somewhat significantly during the trading session on Tuesday, to reach down toward the 50-Day EMA indicator.
- That being said, the market is probably more or less paying attention to the idea that the FOMC meeting is the next day, and that does make quite a bit of sense that perhaps people were not willing to take on a lot of risk.
- Furthermore, if you had bought the S&P 500 a couple of days ago, it does make a lot of sense to take a profit ahead of what could be an extraordinarily volatile session on Wednesday.
Technical Analysis
As I look at the chart, I think the most obvious level to pay close attention to is the 5000 level. The 5000 level courses a large, round, psychologically significant figure, and it is an area that I think you need to pay close attention to. If we were to pull back to that area, I would be very interested in buying some type of bounce. If we break down below there, I don’t necessarily think that we are going to collapse, but if we were to give up the 4925 level, that would be very bad news.
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On the other hand, if we see bullish pressure reenter the market, we could aim for 5150, which is not only one of the best-selling Van Halen albums of all time, but it also happens to be an area where we’ve seen a lot of support earlier in the month. I suspect that area will continue to be a little bit important, but I don’t necessarily think that it is a “brick wall” in the market. After all, we have been bullish for some time now, and therefore I think it makes quite a bit of sense that the overall market still favors the upside.
The early part of the Wednesday session will probably be somewhat quiet, but I think at this point in time the market will look past almost anything that Jerome Powell does via his speech. Yes, he could sound a little bit more hawkish than people expect, but that almost certainly would only end up being a buying opportunity on the dip as it would offer a cheap entry point.
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