S&P 500 Recovering on Monday

S&P 500 Technical Analysis

The S&P 500 has rallied a bit during the trading session on Monday as the market looks to continue the stabilization that it started on Friday. Quite frankly, at this point, it is coming down to whether or not Wall Street traders believe that the Federal Reserve is going to do anything along the lines of monetary policy tightening, or if they are going to go ahead and capitulate to Wall Street as per usual. Certainly, nothing over the last 13 years would make you believe that they are going to do anything for Main Street, but they may actually be forced to do so this time. Runaway inflation is not something that the central bank wants to see, but it is a major concern.

If the Federal Reserve starts to talk about keeping monetary policy loose or at least “data dependent”, that will give Wall Street everything it wants, and we will see this market go much higher at that point. However, if they stick to their guns and start raising interest rates, it is going to come down to whether or not they do it quickly, or if they do it slow and steady. Quite frankly, there is nothing in the economy that suggests that we should be going higher, and if there has ever been a time where the economy exposed the stock market as a farce, this would be it.

Nonetheless, this is the game that we play, and it is about liquidity more than anything else. It is going to be solely dependent on what the Federal Reserve says or does next, and whether or not they sound accommodative.

US Stock Market Forecast Video for 05.04.22

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