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The S&P 500 has drifted a little bit lower in electronic trading on Monday as we have seen the lack of volume keep the markets quiet. After all, it was Memorial Day, and therefore we were dealing with limited trading. The 4200 level is a large, round, psychologically significant figure, and therefore it is worth paying close attention to. At this point, it looks as if are trying to break out to the upside, but I think it is going to be difficult.
S&P 500 Video 01.06.21
Underneath, the 50 day EMA should offer plenty of support as we have seen multiple times, therefore I think what we are seeing here is a scenario where the buyers to come in and pick up value via the dip, as the S&P 500 has been lifted for quite some time. Furthermore, a lot of traders are focusing on the idea of the reopening trade, which of course we have been focusing on for the last several months.
On the other hand, if we were to break down below the 50 day EMA then I think we go looking towards the 4000 level where there is a gap. The 4000 level is not only a large, round, psychologically significant figure, but it is also where we have a major gap that has a lot of people looking at as a potential “floor the market.” I do not sell this market; I only buy puts more we breakdown through major areas like that but at this point time I do not have any reason to do so at this point in time. With this being the case, I think you continue to buy dips and breakouts above.
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This article was originally posted on FX Empire