S&P 500 Technical Analysis
The S&P 500 E-mini contract went back and forth during trading on Tuesday as traders came back to work from the Martin Luther King Jr. Day holiday in the United States, allowing for normal hours and normal volume. What’s interesting is that the markets did not take off to the upside, and of course we have to worry about the idea of the earnings season kicking off. We are currently dealing with the banks, and some of them have reported absently atrocious earnings.
Looking at this chart, if we break above the downtrend line from the channel, it is worth noticing that we could go to the 4200 level. On the other hand, if we turn around and break down below the bottom of the hammer for the previous trading session, then we could drop down to the 50-Day EMA, which sits just above the 3900 level.
The markets will continue to look very noisy to say the least and will move quite a bit based upon what we see during earnings calls. Ultimately, I think you need to be very cautious with your position sizing, as we will more likely than not see a lot of back-and-forth type of trading. You need to understand that the earnings season can be quite noisy, and of course the latest “narrative” can get in the way of reality.
Anything below the 50-Day EMA would kick off quite a bit of selling, although I don’t expect to get there easily. Anything above the 4200 level would signify that the market is probably now in a new bullish trend. At this point, I still favor the downside but things are deafly getting interesting at this inflection point.
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