S&P 500 Price Forecast – Stock Markets Rally Into the Weekend

US Stock Market Forecast Video for 01.05.23

S&P 500 Technical Analysis

The S&P 500 has initially fallen during the session on Friday, only to turn around and show signs of life again. At this point, we are reaching toward the top of the overall consolidation area, which I see as the 4200 level. As we head into the weekend and show signs of strength, that is reassuring for bulls, as it seems like buyers coming in to pick up any dip they can. It’s also worth noting that the 50-Day EMA has offered a significant amount of support, so at the end of the day, it looks like the uptrend is still very much intact, within a larger consolidation range.

It’ll be interesting to see how this plays on next week, because Wednesday features the Federal Reserve interest rate decision, which can have a massive influence on where we go next. Furthermore, you need to pay attention to what the market does, not what it “should do.” After all, we have seen the markets completely ignore the Federal Reserve for months now, so whether or not they will suddenly pay attention to the facts is a completely different question altogether. Nonetheless, the market is somewhat shooting itself in the foot by rising asset prices, because that’s exactly what will keep the Fed tight for longer. This is a huge game of “chicken” that is being played between the Federal Reserve and traders, and it’s only a matter of time before one of them has to blink.

Ultimately, the market continues to be very noisy, and therefore you need to be cautious with your position sizing more than anything else. That being said, the amount of resiliency that we have seen in this market is truly impressive, so therefore I think you have to understand that the trading environment is one where the buyers certainly have control, but it would not take a lot to cause some type of major panic if the Federal Reserve does something that people are not expecting. One thing would be a reiteration of continued rate hikes, something that the market most certainly is not pricing in at the moment.

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