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Christopher Lewis

The S&P 500 fell significantly during the trading session on Tuesday in the premarket hours, reaching down towards the 50 day EMA. By bouncing in the manner that it has, this suggests that the buyers are still willing to come in and pick this market up. This was in reaction to not only technical indicators, but the fact that the market with listening to Jerome Powell give a speech in front of Congress where he had suggested that the Federal Reserve is willing to support the markets and was not concerned about the overall inflation issues. With that being said, the market has turned around to show signs of continuing strength.

S&P 500 Video 24.02.21

To the upside, the 4000 level is still the longer-term target, and after the reaction that we have seen today, it suggests that we are likely to go much higher. The uptrend line underneath would also be very supportive, so with all of that being said I think that this is a market that will eventually find buyers regardless. I have no interest in shorting this market, but if we were to break down below the 50 day EMA, I might start buying puts on the SPY. I do not necessarily want to risk trying to short this market, at least not without knowing what my overall risk would be.

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I do like the shape of this candlestick, and that certainly suggests that there are more than enough traders out there willing to pick up value every time it shows up. That being said, I would anticipate a lot of volatility but given enough time there will be more bullish pressure going forward as the liquidity is forcing the issue.

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

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