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S&P 500 Technical Analysis
The S&P 500 contract rose slightly in the futures markets on Monday, to reach the 50 Day EMA. That being said, we have also pulled back from it to form a bit of a shooting star. Regardless, I would not read too much into the candlestick other than it shows that simply going straight up in the air from here is going to be a bit more difficult than some people would have imagined. With that in mind, I think it’s probably only a matter of time before we sell-off, and quite frankly there’s not much going on out there that tells me the market rally should continue.
One of the big reliefs has been that bond yields have pulled back a bit, but eventually the market will start to come to grips with the fact that people are buying bonds for safety, and that’s why the yields are dropping. Furthermore, we have to worry about various economic factors, and none of those have changed for the better. Bear market rallies tend to be very vicious, and I think that’s what we have just seen. If we turn around and break down below the 4150 level, I think the first selling opportunity presents itself. If we break down below the 4100 level, then I think there will be aggressive selling at that point.
On the upside, the market could go as high as 4300 and not change much structurally. The 200 Day EMA is a bit above there, and would come into the picture at that point. There is a bit of a “shelf” at the 4300 level of selling pressure that you can clearly see from several weeks ago.
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This article was originally posted on FX Empire