Stock Markets Struggle Yet Again

The S&P 500 initially tried to rally during the trading session on Tuesday but has found the 200 day EMA to be a bit too resistive. Furthermore, it sits right at the 4400 level so that would attract a certain amount of attention as well. The markets continue to be very volatile and of course have a lot of different things to pay attention to, not the least of which will be the tightening monetary policy coming out of the Federal Reserve. Beyond that, we have the obvious issues in the Ukrainian conflict, so there is a lot out there that has the market worried right now. Because of this, I do believe that it is going to be difficult for the S&P 500 to gain significantly in the near term.

S&P 500 Video 02.03.22

The one thing that could send the S&P 500 back up in the stratosphere would be the Federal Reserve coming out and suggesting that they cannot tighten monetary policy. That would obviously be a major victory for liquidity, which is essentially what the market has been running on for the last 13 years. With this in mind, I believe that shorting rallies that show signs of exhaustion, just as the one that we have seen on Tuesday has ended up being, should be a nice opportunity to get involved. If we break down below the bottom of the candlestick that marked the lows of last week, we could see this market race towards the 4000 handle. As things stand right now, I do not necessarily have a setup that I would take in order to get long of the S&P 500.

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