S&P 500 Technical Analysis
The S&P 500 has shown itself to be bullish during the trading session on Tuesday as we continue to see a lot of noisy behavior. Ultimately, this is a market that will continue to be very noisy, as we have the 3900 area that extends all the way to 3950. Furthermore, we have the 50 Day EMA entering the same area, and of course we are in the midst of earnings season. In other words, it’s a whole mess of problems just waiting to happen.
Signs of exhaustion will more likely than not be jumped upon by short-sellers, because quite frankly the economy does not signify that this market should go higher. Furthermore, there are serious concerns about liquidity, so, therefore, you have to pay close attention to that as well. After all, the economy has some effect on the stock market, but the reality is it’s about liquidity more than anything else, so the tight monetary policy coming out of the Federal Reserve will also cause some issues.
After all, Wall Street has pretended that the US economy has gotten better for quite some time, so now that it is actually struggling, it should not be a huge surprise that they try to push the market higher. Remember, Wall Street and the economy have absolutely nothing to do with each other. That being said, if we do break above the 4000 level, then we can make a run all the way to the 4200 level. Above there, then I think the trend has changed.
Alternately, if we break down below the 3700 level, then it’s possible we go down to the 3640 level, which is an area that previously offered support.
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This article was originally posted on FX Empire