Stock Markets Trying to Stabilize

The S&P 500 has gone back and forth during the course of the trading session on Tuesday as we are hanging around the 4200 level. The 4200 level is an area that has been important more than once, so therefore it is interesting to see that we have a little bit of buying pressure in this area. That being said, I think rallies will continue to be nice selling opportunities, as the market is definitely bearish for multiple reasons.

S&P 500 Video 09.03.22

Looking at the overall geopolitical situation, it is obvious that the market will continue to focus on the Ukraine war, and of course further tensions between Russia and the West. Beyond that, the market has to focus on the idea that the earnings are being guided lower, and the US economy is almost certainly going to decelerate. That means that the market has to price the entire situation differently.

The shape of the candlestick is of course very neutral, so I think that also will build up a little bit of confidence for traders out there that perhaps we will try to recover. That being said, I think that the 4250 level should offer resistance, right along with the 4300 level, and then the 200 Day EMA.

If we break down below the bottom of the candlestick for the session on Tuesday, then it opens up a move down to the 4100 level. Below there, then we go looking towards the 4000 level overall. We are getting ready to form the so-called “death cross”, perhaps in about a week. While I do not necessarily subscribe to that indicator, when the 50 Day EMA crosses below the 200 Day EMA, the reality is that a lot of longer-term traders look at that as the epitome of a downtrend.

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