Friday's close in the S&P 500 indicates that buyers are continuing to support this market going into the weekend. It indicates that no one was selling to take profits or it did not get high enough to find new sellers coming into the market. This does imply continuation of the trend. However, to see arrest day on Monday would not be surprising. The next level to...
Friday will be a barometer of the market attitude going into the weekend for the S&P 500. The insight into this attitude rest with the buyers and their ability to create and hold a higher close on Friday.
Although we had a strong close in the S&P 500 on Wednesday, we are not done yet. We have more economic numbers coming out on Thursday and Friday that can stimulate this market up or down. The market was comforted with the feds leaving interest rates alone. Can the buyers that have entered the market provide follow-through over the next 2 days.
The structure of the S&P 500 chart implies the anticipation of the Fed leaving interest rates unchanged. If indeed they do that, look for a rally on Wednesday. If they would increase interest rates look for this market to fall out of bed.
My expectation for Tuesday in the S&P 500 is a set up for all the fundamentals coming out in the remainder of the week. This typically would be Tuesdays range inside of Monday's range. Although buyers did come in to this market on Monday be cautious if you're on the long side of this market because it would not take much to tip it over.
Buyers did not show up on Friday in the S&P 500 as sellers dominated Friday's price action. This implies that sellers were comfortable going home short the market. Not looking for a big day down on Monday as the market begins to position itself for the upcoming Fed announcement on Wednesday.
Sellers remained in control at the close of Thursday in the S&P 500. Nothing indicating that buyers are present. However, we are approaching levels that buyers have entered before and with a Friday session do sellers want to go home short into the weekend. Friday session could give us some clues and answers into these issues.
The break to lower levels in the S&P 500 on Wednesday are a reflection of the market uncertainty about future Fed action. Unless we get positive information from the GDP report on Thursday, the expectation will be lower levels in the S&P 500.
The close on Tuesdays price action in the S&P 500 implied a lack of confidence from buyers. We do have more earnings coming out that could stimulate this market higher but right now a sideways move or lower would be expected with the current price structure.
The price structure on Monday in the S&P 500 represents balance. Both buyers and sellers were present with neither dominating the final market action. This implies the possibility of transition to higher prices but without any dramatic fundamentals look for a day on Tuesday that's inside the range of Monday's price action.
Sellers provided a confident close in the S&P 500 on Friday. This is based on the fact that we closed right at the low of Friday's action with no indication that sellers wanted to buy the market back to take profits going into the weekend. However, we are at swing lows so be cautious on the short side for Monday's action.
Without no new fundamentals scheduled on Friday and after the break to lower levels in the S&P 500 on Thursday, the expectation would be for Friday would be a sideways move inside the range of Thursday. This could occur because of profitaking on the short side as we go into the weekend.
The break lower in the S&P 500 on Wednesday implies the market moving on the expectation that the Fed will keep interest rates higher and longer. This does make the market nervous. Since the market is moving lower on the anticipation of that possibility, typically I do not expect a dramatic day down on Thursday without new fundamental reasons to move lower.
Is the confidence there in the S&P 500 for follow through to the upside on Wednesday to a close above 4442 4450? The last 2 days buyers entered the market. If we do not see a close above 4440, then look for a sideways move for Wednesday's action.
After the move to the upside in the S&P 500 on Monday of rest day on Tuesday would not be surprising.
An inside day to only slightly lower movement on Monday would make sense in the S&P after the volatility of the last 2 days. However, the volatility in the Israeli situation could easily turn this market lower.
Banks will begin reporting earnings on Friday and these results can set the tone for the S&P 500 going into the weekend. The expectation would not to be another large day down as we saw on Thursday.
Get ready for the CPI numbers on Thursday and its impact in the outlook for the S&P 500. The bias for this market is still to the upside. However, if there is a surprise with the CPI numbers this market could easily turn over to the downside.