The S&P 500 initially fell during the day on Friday, as less than thrilling economic numbers coming out of the United States, but ultimately regained a lot of the losses. In fact, we managed to break above the 2450 handle, which is the beginning of the “ceiling” in the market. I think that ceiling extends to the 2455 handle however, so I’m not willing to buy into we break above there. Short-term pullbacks will probably be necessary to build up enough momentum to break out to the upside, as more traders see the bullish pressure as likely to continue. With this being the case, I think that we will break out and reach towards the 2500 level over the longer term, and that buying on the dips going forward will probably be the way most traders look at this market.

Monetary policy

Monetary policy coming from the Federal Reserve looks to be very slow and methodical, and market seem to like that. Because of this, I believe that it’s only a matter of time before the markets break out to the upside and continue to extend of. I think that the 2500 level is a nice longer-term target, but I think that there could also be a lot of volatility between here and there. I believe that the 2440 level underneath is the “floor” going forward, and that being the case I think that it’s likely that the buyers will continue to look to this market for value as a breakout seems all but imminent at this point.

This article was originally posted on FX Empire

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