The S&P 500 has been a bit sideways during the session as we chop back and forth the Friday announcement.
The S&P 500 has gone back and forth during the session on Thursday as we are sitting just below the 200 day EMA, and of course, have to worry about the jobs number on Friday. With that being the case, I think it’s probably only a matter of time before we get an explosive move. All things being equal, one would assume that this resistance should hold, but if we were to break above the 4200 level, we could see the S&P 500 really take off. That’s not my base case scenario, but it is something that I need to keep in the back of my mind as I trade this.
Underneath, I believe that the 4100 level is crucial. If we were to break down below that level, then we could see a much deeper correction. At that juncture, we probably lose another 100 points or so, and go looking to the 50 Day EMA.
Unfortunately, this is all about perception and whether or not the Federal Reserve is going to tighten monetary policy even more aggressively. The market does not believe that the Fed has the ability to do so, while the Fed swears up and down they do. If we get a hotter than anticipated jobs figure coming out of America on Friday, it’s very possible that we could see stock markets take a bit of a nosedive, as traders will look at that as yet another reason for the Federal Reserve to pay close attention to its monetary policy, perhaps giving it yet another reason to tighten. Either way, I think we are a little overdone in the short term but always keep your eye on the other direction.
For a look at all of today’s economic events, check out our economic calendar.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.