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Christopher Lewis
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The S&P 500 has pulled back a bit during the course of the trading session on Friday as the market is starting to digest some of the recent gains. This has been a very volatile timeframe over the last couple weeks, and now it looks like we are trying to get towards the 4200 level. The 4200 level is an area that we have seen a lot of pressure at, so if we can break above there then it could kick off the longer-term uptrend. So far, we have seen the 50 day EMA offer support, as you can see plainly on the chart.

S&P 500 Video 18.05.21

To the downside, I think that the 4000 level will essentially be the “floor the market”, especially as there is a major gap there. All things being equal, this is a market that I do think continues to go higher over the longer term, perhaps sending the market towards the 4400 level once we get a little bit of momentum to the upside. I think in the short term we are looking at a lot of choppy behavior and therefore you have to be cautious about your position size.

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At this point, it is not until we break down below the 4000 level that I would be concerned, and even at that point I would be a buyer of puts more than anything else. Shorting this market is something that I gave up trying to do years ago, as the Federal Reserve continues to pump the markets full of liquidity, and that something that is not going to change anytime soon.

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

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