S&P 500 Futures Break Above the 50 Day EMA

S&P 500 Technical Analysis

The S&P 500 futures market has broken above the 50 Day EMA, as it looks like it is trying to go to the 4500 level. The 4500 level has a little bit of a psychological influence, but we have sliced through it enough times that I think it will not necessarily be like a “brick wall.” If we break above there and start to look at the 4600 level, then we could be talking about a potential “inverse head and shoulders.” That is a bit of a stretch in theory, but perhaps Wall Street is starting to bake the idea that the Federal Reserve cannot raise interest rates as aggressively as they feared. It is hard to tell because quite frankly Wall Street will come up with any narrative it can to buy stocks.

On the downside, if we were to break down below the 4400 level, then it very likely could open up the possibility of a move down to the 4300 level, followed by the 4100 level. The S&P 500 falling could be in reaction to inflation, the Federal Reserve raising rates rather quickly, or perhaps just the fact that we are almost certainly heading into a recession.

It is hard to tell though because at this point Wall Street has an entire generation of traders that have only dealt in a high liquidity environment. If they were to focus on economic fundamentals, is hard to tell what would happen simply because they have never had to. As things stand right now, it looks like 4500 will be the key as to whether or not we can continue to go higher.

US Stock Market Forecast Video for 21.04.22

For a look at all of today’s economic events, check out our economic calendar.