200 Day EMA Proves Supportive for the S&P 500

The S&P 500 has rallied a bit during the trading session on Tuesday as it has been reported the Russian troops are starting to pull back a bit from the Ukraine border. Vladimir Putin has also suggested that there is a diplomatic path forward, so this suggests that perhaps we can avoid at least that one major issue. That being said, there is also concerns out there about inflation, which the Producer Price Index came in during the day at 0.8%, much hotter than the anticipated 0.5%. In other words, the Federal Reserve is likely to become very aggressive with interest-rate hikes, and it is probably only a matter of time before the markets focus on that yet again.

S&P 500 Video 16.02.22

That being said, if we were to turn around a break down below the bottom of the hammer from the Monday session, then it could very well open up a move towards the 4250 handle. To the upside, I do believe that the 50 day EMA which is sitting near the 4546 level and sloping lower is a resistance barrier. In general, when you see the market go back and forth between the 200 day EMA and the 50 day EMA, it is a bit of a squeeze for technical traders, and it quite often means that we are going to see a bigger move given enough time. I think we are trying to build up inertia for the next swing, which could be rather impressive due to the fact that there are so many moving pieces at the same time. We probably bounce a bit from here, but there is still plenty of resistance.

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