S&P 500 Weekly Price Forecast – Stock Markets Pull Back From All-time Highs

The S&P 500 had a lot to think about this week, as the Federal Reserve has now threatened multiple interest rate hikes over the next couple of years. The reality is that they will not do anything to upset the market too much, because that is what they have been focusing on. However, there are some questions as to whether or not they can be as dovish as they once were, simply because of the job situation in America and of course the fact that the economy is running with so much inflation. As a general rule, central banks, especially the Federal Reserve, tend to be a little late to the party. In other words, they are now fighting inflation that has been evident for the last six or nine months. In other words, there are about to make a policy mistake.

S&P 500 Video 20.12.21

With that being said, we probably have a while before we start to see truly negative effect to the economy, but longer-term traders are already starting to look at the possibility of some type of larger selloff. For myself, I believe that the next couple of weeks are going to continue to see a lot of choppy behavior with the 4500 level underneath offering significant psychological support. After that, then comes the 4250 handle, which I think could be a trend defining bottom, and if we were to break that then I think buying puts might be the best route. I do not short US indices, the Federal Reserve finds a way to pick them up regardless of what is going on, as they defend their friends on Wall Street. To the upside, if we were to break all-time highs, then I believe that we will eventually go looking towards 5000 sometime in the new year.

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