Silent trading as the underlying index closed
The macroeconomic situation is not good, but no market moves in one direction forever.
Monday was Memorial Day in the US, so any trading in the S&P 500 index will have been after hours in the futures markets. That being said, we tried to rally a bit, but it should be noted that we just stalled at the 50-day EMA. The 50-day EMA is a fairly commonly followed technical indicator, so the fact that we stopped there, it is likely that we will have some technical shorting at this point.
If we turn around and fall below the 4150 level, this will be the first barrier for sellers to break through. After that, level 4100 could then potentially be supported. If we were to fall below the 4100 level, then the market would almost certainly collapse quite drastically at that time. Given enough time, the market would then turn towards the 3900 level.
It’s been a very bullish run over the past few days, but keep in mind that we’re in a very bearish market, so sometimes you’ll get these massive moves higher. Bear market rallies are some of the most vicious, but they are particularly tricky because they also tend to sell out just as quickly. Even though we are trying to go higher at this point, it’s really not until we break through the 4300 level that you have the “all clear” for a trend change. What’s also interesting in this area is that the 200-day EMA also sits right above it, so I’m anticipating a huge battle in this area. Yes, the S&P 500 was oversold, but all of the fundamental reasons for this market’s fall remain intact, and it’s hard to imagine things suddenly changing. Yes, interest rates have come down a bit in America, but that’s just because people are starting to buy bonds. Eventually, the market will figure this out and start falling again. However, if we break above the 4300 level, we need to follow the price and stop arguing. The macroeconomic situation is not good, but no market moves in one direction foreverso I think what we saw here was a bit more of a relief rally than anything.