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The S&P 500 went sideways initially during the day on Friday, but then broke down rather significantly, reaching towards the 2650 handle, before bouncing towards the 2680 level. As I record this, it looks as if we are starting to drift a little bit lower, and I think that it’s only a matter of time before we continue the downward motion, perhaps reaching towards the 2600 level underneath. On the longer-term charts, that’s an area that is important, but not nearly as important as 2500. If we were to break down below the 2500 level, that would be an extraordinarily negative sign, and send short-sellers into this market hand over fist.
Alternately, if we can break above the 2700 level above, then I would be a buyer as it would be a sign of strength in a market that is becoming resilient again. I believe that the tariffs will continue to keep a lot of fear into the market, so it’s likely that the downward pressure should continue. I don’t know that looking a breakdown, I just think that we are in the process of trying to correct some of the overbought conditions that we see in the stock markets around the US and world. Ultimately, I still have a target of 3000, but that’s obviously a longer-term target. Shorting would be done on short-term charts only.
S&P 500 Video 05.03.18
This article was originally posted on FX Empire