The S&P 500 initially tried to rally during the course of the trading week, but then fell towards the 4430 level. The uptrend line of course offers quite a bit of support, so you should pay close attention to that. If we were to break down below the 4400 level, then we could go much lower, offering an opportunity to buy puts, because at this point, I would not be shorting this market due to the fact that the Federal Reserve is so manipulative either through jawboning or intervention in the bond market.
S&P 500 Video 20.09.21
That being said, the market is very bullish, and knows that the Federal Reserve is on its side, so even if we do get a bit of a break down from here, I would be a buyer of puts, recognizing that we could go looking towards the 4200 level. On the other hand, if we turn around a break above the highs of the week, it is likely that we go looking towards the 4600 level. The 4600 level is a large, round, psychologically significant figure.
Regardless, you need to keep in mind that it was quad witching during the Friday session, so it suggests that we are seen a lot of excess volatility more than anything else. That being said, the market is likely to go higher over the longer term, so I would not read too much into the negativity that we saw towards the end of the week. The market is one that has found plenty of buyers on dips, and I think that will continue to be the case.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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