S&P 500 Technical Analysis
The S&P 500 has rallied a bit during the trading session on Friday, especially right after the Non-Farm Payroll numbers came out a little better than anticipated from an inflationary standpoint. The average hourly gain of course gave traders hopes that the market could find some type of soft landing, with inflation not overwhelming gains, especially as the hourly earnings suggested that perhaps even though the jobs market remains strong, there’s the possibility that we can see average hourly earnings dropping, so that will keep inflation under control. After all, the more money people have, the more they spend. And recently, this has been a situation that has been all about inflation.
Underneath, the 4500 level should be a support level, as it is a large, round, psychologically significant trigger. Underneath there, then we have the 50-Day EMA, which is rising rather quickly. All things being equal, if we break above the highs of the last couple of days, then it’s possible that we go looking to the 4600 level after that. Keep in mind that Wall Street is finding a reason to go long regardless of what happens, so if we get any type of situation where inflation looks like it slows down, the S&P 500 takes off.
That being said, keep in mind that Monday is a major holiday in the United States with it being Labor Day, therefore I do think that you need to stay away from this until the middle of next week. Furthermore, we also have the majority of liquidity coming back into the market after the summer break, as traders come back from holiday. It’ll be interesting to see how this plays out, but right now from the technical analysis standpoint, it does look like the market has formed a major “W pattern”, so a breakout above the last couple of days should really send this market higher. However, we do have to be cautious as to whether or not major firms and traders will see the situation in a different light, and plunge this market. I suspect that we will get a lot of answers here in the next week or so but as things stand right now, it looks like we are going higher.
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