The S&P 500 spent most of the day being very volatile, especially in the early morning hours. We are pressing a significant resistance barrier, and as I record this the market is trying to break out.
The S&P 500 has been very volatile during trading on Monday, reaching towards the 2850 level, an area that was recent highs. If we can break above there, then the market will be free to go much higher. However, if we fail at here I think you can count on some type of pullback that value hunters will be looking at. That being the case, I believe that the market is one that will be very choppy and volatile, but if you wait for a break above the 2850 level, the market then goes to the 2280 level next, and then eventually the 2900 level.
Earnings season will slow down now, so there won’t be as many hits and misses, but I believe that a lot of what we are paying attention to is US dollar strength, and of course trade war concerns. Currently, it appears that America is wending the trade war if you look at it from a stock market valuation, as China is down over 20%, and mysteriously the S&P 500 continues to ignore that situation. If trade fears continue to jump into the market, we could get a sudden selloff, so keep in mind that a lot of this market will be determined by headlines more than anything else. Because of this, I would keep my position size very small. If we do break out to the upside, then you can think about adding to your position, but in the short term it looks as if the one thing I think you can count on is a lot of noise, so be very cautious.
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.