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Christopher Lewis
S&P 500 daily chart, June 12, 2019

The S&P 500 initially tried to break out to the upside during the session on Tuesday, clearing the 2900 level. However, we have spent the entire day simply drifting lower, and it does look as if this market is running into a brick wall of resistance. Ultimately, it’s not until we break above the daily highs that I would be comfortable going long, and I think we are running into a serious brick wall of trouble here.

S&P 500 Video 12.06.19

Granted, the gap below should offer support, and if we can break down through that it’s very likely this market will go much lower. There are a lot of reasons to think that we could see a break down, but at this point in time there’s so many moving pieces that is difficult to imagine this is going to be an easy market. The Federal Reserve loosening its monetary policy will certainly help to appoint, but we have a lot of concerns in the corporate debt markets that are suddenly flashing red signals.

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If we do break to the upside, I think the 2950 level will be massive resistance, and a break above there could send this market even higher. A move above there will send this market towards the 3000 handle, which of course will cause a lot of resistance, both psychologically and more than likely structurally. Ultimately, I believe this market continues to be erratic and difficult. We are overbought at this point though, so a pullback is probably necessary.

Please let us know what you think in the comments below

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