The S&P 500 continues to power higher, even though this last week has been somewhat choppy. What I find interesting is that it looks like on the daily charts we are trying to do everything we can to simply kill time, which is another way to work off so much froth.
The S&P 500 has had a slightly positive move during the week, but if you look at it under the hood, you also recognize that the market not selling off after a huge vertical move is a massive win for the buyers. I do think it’s probably only a matter of time before we take out that high, and at this point in time any pullback will be looked at with scrutiny, and will probably be thought of as an opportunity to add to positions.
Don’t forget that the so-called “Santa Claus rally” is about to start, and although it doesn’t necessarily guarantee higher pricing in December, the statistics are alarmingly positive. In other words, I don’t think we are done rallying, but we are stretched. Ultimately, I see support at the 4500 level, and then eventually the 4400 level. It would take something rather significant for me to be a seller of the market considering how it seems to want to defy gravity, so therefore I’m just looking for value.
However, if we do break the recent swing high, then I think the market probably goes looking to the 4750 level over the longer term. Keep in mind that Wall Street is in the business of selling stocks, and of course this is not an index that is equal weighted. In other words, it’s just a handful of stocks that will make this thing move. As long as all the usual suspects are rallying, this index will as well.
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.