S&P 500 Price Forecast – Stock Markets Opened Up on The Back Foot

The S&P 500 has fallen a bit during the course of the trading session on Thursday to break down through an uptrend line, and then test the 50 day EMA. Having said that, the market turned around to bounce and forming a supportive looking candlestick, so at this point in time it looks as if the buyers are coming in based upon algorithms that track these technical indicators. If we can break above the hammer, then the market could continue to reach towards the upside.

S&P 500 Video 20.08.21

If we break down below the bottom of the hammer and the 50 day EMA, then it is likely that the market could go looking towards the 4200 level, which is an area that has offered support in the past. Furthermore, the market has even more support underneath, especially at the 4000 level where the 200 day EMA comes into the picture and of course it is also a large, round, psychologically significant figure.

All things being equal, this is a market that I think will eventually find buyers and therefore I would not be a seller straight out. However, if we did break down from here, I might consider buying puts, because at least that way I can keep my risk limited. As far as shorting the market is concerned, it is almost impossible to do in an environment that the Federal Reserve has its hands in the market every time there is a significant amount of trouble. Looking at this chart, we have been very bullish for quite some time, and therefore I think it is only a matter of time before we would go looking towards the 4500 level and possibly beyond.

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