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Christopher Lewis

The S&P 500 initially fell during the course of the trading session on Friday to reach towards the 3800 level. The 3800 level is a large, round, psychologically significant figure that did cause a lot of noise previously as far as resistance is concerned. The fact that we pulled back there to only find buyers again suggests to me that we are ready to continue with the next leg higher. The candlestick suggests that we are going to find plenty of buyers underneath. To the upside, the market is likely to continue to look forward due to the idea of stimulus more than anything else.

S&P 500 Video 25.01.21

When you look at the chart from a longer-term standpoint, the 4000 level is the target for longer-term traders, due to the fact that we have been consolidating in a 400 point range between 3200 and 3600 above. That 400 point range extrapolates from the breakout to reach towards that 4000 level. Furthermore, the market does tend to like these big figures as targets and therefore it all is somewhat tidy. I do not know how long it takes to get there, but one thing that Wall Street might be concerned about down the road is that stimulus is perhaps threatened as far as size is concerned, and of course the timing as there are some objections to all of that.

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Nonetheless, longer-term Wall Street knows that if it throws a big enough tantrum the Federal Reserve and Congress will bail them out. With that in mind, buying the dips should continue to work over the longer term with such bullish pressure underneath.

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

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