S&P 500 Price Forecast – Stocks Pull Back in Risk Off Trading

The S&P 500 has gapped lower to kick off the session on Wednesday as the fear around the world kicked the session off on ‘the wrong foot.’ That being said, the markets have looked at the 50 day EMA as dynamic support. The markets have seen a nasty couple of sessions, but at the end of the day we are looking at the 4000 level as support from both a psychological and structural standpoint. The gap that sits just above there also is something to pay close attention to.

S&P 500 Video 20.05.21

The stock markets have been bullish for some time, and therefore the markets are looking good from a longer-term standpoint, but there is a real possibility of massive volatility as the stock markets have been overbought for some time. Ultimately, I think we do recover, and I have no interest in trying to short this market, but I recognize that if we break down below the 4000 level, then I might be a buyer of puts. At that point, I would assume the market goes looking towards the 200 day EMA, which is approaching the 3800 level.

The size of the candlestick for the session on Wednesday does not necessarily suggest that the markets are ready for a meltdown. The market should continue to see buyers on dips, and therefore the markets are going to see choppy behavior. The S&P 500 should eventually break above the 4200 handle, and then we could go all the way to the 4400 level. The drop should end up being another opportunity to get ‘value’ in a market that has been lifted by the Fed for some time.

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