S&P 500 Price Forecast – Stock Markets Have Volatile Day Thanks to Mr. Powell

The S&P 500 was thrown on its heels during early trading on Tuesday as Jerome Powell has suggested that inflation was no longer “transitory”, something that almost everybody on Wall Street knew except him. It is strange turn of events, the markets reacted to the idea of higher interest rates, something that we had seen just a few weeks ago. In other words, we are right back where we were just a few weeks ago, with traders trying to discern whether or not higher interest rates will derail everything or take a look at the longer-term outlook for money been relatively cheap even if the interest rates doubled.

S&P 500 Video 01.12.21

At this point, we are parked on the 50 day EMA, which does offer a certain amount of technical support, and of course you cannot minimize the idea of the so-called “Santa Claus rally” when everybody needs to make up for underperformance. A lot of traders will use this time a year to make up gains as well, knowing that other traders desperately need the market to go higher. I am a bit surprised that Jerome Powell was willing to tank the market, but what is done is done.

We are still very much in an uptrend, and certainly have a lot of support levels underneath below the 50 day EMA in the form of the 4500 level, and of course that uptrend line that I have drawn on the chart. Ultimately, this is still a “buy on the dips” market until something significant changes, which at this point still has not but the reaction of Algo trading has been like a wrecking ball.

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