Stock Markets Attempting to Build a Bullish Flag

S&P 500 Technical Analysis

The S&P 500 has pulled back a bit during the trading session on Tuesday, although it has not necessarily been a major meltdown or anything like that. It appears that we are trying to form a bit of a bullish flag, and if we can take out the downtrend line that I have marked on the chart, which is essentially the 4585 level, which is also coincidentally where we had seen the previous double top, we could see this market go much higher. Quite frankly, Wall Street is trying to determine whether or not the Federal Reserve is going to come to their aid, or if they are going to try to fight inflation. Right now, it appears that the market will continue to see a lot of back and forth pressure due to the speculation.

If we were to break below the 50 Day EMA, then I think we are probably in a significant amount of trouble. It is worth noting that the Friday candlestick last week was a hammer, so it certainly suggests at least that the 4500 level will be important, and that there are buyers out there willing to jump into this market. I do not necessarily think too much can be read into this market until we get an impulsive candlestick, which right now we just seem to be content going sideways. However, we will get that explosive session that tells us which direction we are more likely than not ready to go to. Until then, short-term range-bound trading systems probably wins the day more than anything else.

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