The S&P 500 tried to rally during the week, but as we closed, we ended up forming a shooting star, and negative sign indeed. The 2700 level looks to be rather resistive, so I think that the market may be looking for a pullback.
The S&P 500 has rallied significantly during the week, but rolled over at the 2700 region to form a shooting star. The shooting star of course is a very negative candle, and I think at this point were going to see sellers step into the market in what will be very thin trading conditions. I don’t expect some type of massive selloff, I just think that a pullback is probably necessary. The 2650 level will be the first target to test, but once we break down below there, I think that the market will probably reach towards the 2600 level further below. That’s an area that I think will be supportive, based upon the previous structural resistance.
I would love to buy the S&P 500 closer to the 2600 level, and a supportive candle is reason enough to get involved. A bounce from there would be a nice buying opportunity as well, as the longer-term uptrend should continue. I don’t think that we are going to break down drastically, I just think that we’ve got a little ahead of ourselves, which happens from time to time. With tax reform coming out of the United States, that should continue to be bullish for the S&P 500, but we did run up in anticipation of that situation, so I think that a “buy the rumor, sell the news” move may be ready to happen, which would of course help us find value and lower pricing.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.