S&P 500 Technical Analysis
The S&P 500 E-mini contract rallied during the course of the trading session on Friday, as the Non-Farm Payroll announcement came out hotter than expected, but also showed that wage inflation was starting to drop. In that scenario, people started to bet that the Federal Reserve is getting closer to loosening monetary policy than they thought just a couple of days ago. This of course is nonsense, but what it does look like is that the 50-Day EMA continues to be a bit of a problem. Even if we break above that indicator, there should be a lot of noise between there and the 200-Day EMA.
On the other hand, if we break down below the 3800 level, then it opens up a move down to the 3700 level. In that environment, the market becomes more of a “risk off” type of situation, therefore we would probably see the downward pressure accelerate. Ultimately, I don’t have any interest in getting too cute with this, because I do think that we have some serious issues. Nonetheless, given enough time it’s very likely that we will see plenty of volatility, which of course is going to continue to see traders get chopped up in this environment.
The market is very noisy to say the least, so you need to be cautious with your position sizing and recognize that you are more likely than not going to be in a situation where we are going to be more back-and-forth than anything else, so if you have a nice range bound trading system, then you may find this market interesting. That being said, noise will be the order of the day here.
For a look at all of today’s economic events, check out our economic calendar.