- The S&P 500 has gone back and forth during the trading session on Tuesday during the early hours, as we all are dancing around the crucial 6000 level.
- The 6000 level is an area that obviously is a large, round, psychologically significant figure, and an area that has caused a lot of noise already.
- That being said, I think that if we get some type of pullback, there will be plenty of people willing to step into the market and lift things.
Wednesday and CPI
The market has been very bullish, but on Wednesday the market will get the latest CPI numbers coming out of the United States, which obviously will be influential on where the risk appetite is going, which will in turn influence where the overall market goes. The S&P 500 will continue to dance around the 6000 level, which is obviously an important round figure. This is an area that I imagine will attract a lot of attention, from both headlines and options trading. This area has been important multiple times in the past, as we have ‘flipped’ back and forth from time to time.
Pullbacks at this point in time should continue to be buying opportunities. I don’t really see a situation where I am willing to short this market, as it is far too strong at this juncture. The all-time highs are just above, and they are now going to be an area that will be ceiling for bullish traders. The 5900 level is an area that I think is some support just waiting to happen and could serve as a floor if we get a poor CPI number. Anything below could lead to a move to the 50 Day EMA below.
On a fresh, new, high, the market could very well go looking to the 6500 level above, and we could think of this of a market that has the likelihood of grinding higher more than anything else. This is an extension of a recovery after the overreaction to the downside, and now we are basically where we started.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
