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The S&P 500 rallied just a bit during the course of the trading session on Thursday, as we are ready to continue the overall uptrend. That being said though, we may get a short-term pullback as we have seen a couple of strong days after a massive selloff. All things been equal, I think we will continue to see a lot of noisy behavior at this point, and of course indecision. A lot of the noise has been coming from the bond market, which has been suggesting that we might struggle.
S&P 500 Video 23.07.21
When you look at the chart, you can see there is an uptrend line underneath and the 50 day EMA both offering support. At this point in time, pullbacks towards that area should be looked at as potential buying opportunities as long as we can stay above there. If we do not, then if we break down below that level it is likely that we go looking towards the 4200 level. Underneath there, then we could go looking towards the 4000 level underneath. The 4000 level is a large, round, psychologically significant figure, and an area where we have seen a gap. Even if we break down towards that area, it would only be a 10% drop, which is standard.
If we were to break down below the 4000 level, then I would be a buyer of puts, but until then I have no interest in trying to get short of this market under any circumstance. The Federal Reserve continues to loosen monetary policy, and as a result I think traders will continue to instinctively purchase stocks, especially as we are in the midst of earnings season.
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This article was originally posted on FX Empire