Yes, there’s almost always some sort of bullish narrative, but just because Wall Street desperately needs the Federal Reserve to start easing monetary policy doesn’t mean that’s going to happen.
- The S&P 500 rallied a bit in Tuesday’s trading session to show signs of life as we continue to consolidate globally.
- The 200-day EMA above could continue to offer significant resistance, not to mention that it is near the 4000 level.
- In that case, I wouldn’t be at all surprised to see a bit of a pull back, especially since the FOMC meeting minutes are coming out later in the day on Wednesday.
- This will be the last announcement before entering the Thanksgiving holiday, which of course will have the underlying index closed for Thursday.
Friday will be a shortened trading session, so frankly that’s probably something best avoided, although there’s still a lot we can infer from the charts themselves. We are currently between the 50 and 200 day EMA, which means we could be in for a bit of pressure. If we get out of this area, I expect to see some thrust in one direction or the other. If we can break the 200-day EMA, we could very well see the S&P 500 run towards the 4100 level. On the other hand, if we break below the 50-day EMA, we could start falling again towards the lows, which means we could drop all the way to the 3600 level.
Because of this, I think you have a situation where we are going to see volatility increase sooner or later, and even though we had a nice run up, we saw a correction like this earlier this year, which lasts long enough with the story of bear market bounces. Yes, there’s almost always some sort of bullish narrative, but just because Wall Street desperately needs the Federal Reserve to start easing monetary policy doesn’t mean that’s going to happen.
After all, the underlying economy is suffering from massive inflation, and that’s a far bigger concern for the Federal Reserve than stock prices. In fact, they want to depress the idea of wealth, which means they have no problem with the destruction of asset prices. In this case, I think it’s only a matter of time before we get some sort of sell-off, but obviously that’s not happening right now.
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