The S&P 500 has rallied a bit during the course of the trading session on Monday but has also pulled back as we continue to see a lot of noisy behavior.
The S&P 500 has rallied just a bit during the course of the trading session on Monday but has also given back quite a bit of the gains to show signs of hesitation. When you look at the longer-term chart though, you can clearly see that the market had formed a massive bullish flag. The massive bullish flag measures for a move well above the 4800 level, so I think that it is likely that we continue to see plenty of value every time we see a little bit of a dip. The 4600 level underneath should be supportive, especially as the 50 day EMA is racing towards it.
Looking at this chart, I have no interest in shorting, but I do recognize that any time we pull back there should be plenty of value hunters out there. The trend is most certainly bullish, and therefore I think that it is all but impossible to short anytime soon. In fact, it is not until we break down below the 4250 level that I would consider anything bearish happening. The market has gotten a bit ahead of itself of the last several weeks, but it looks like the noise we have seen of the last couple of days have simply been a matter of digesting the move. I think that continues, but we may have some growing pains along the way. I still have a target of at least 4800, and quite frankly I think 5000 is much more likely. That being said, the market will continue to pay close attention to the earnings season noise, which of course has been relatively bullish.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.