The market is currently in a situation where potential risks are mounting, including rising inflation, supply chain bottlenecks, and geopolitical tensions.
- The S&P 500 index has been consolidating in a narrow range between the 4100 and 4200 levels during the Thursday trading session.
- The market has been subdued in the early hours of trading due to the impending Good Friday holiday and the upcoming Non-Farm Payroll report, which will be released during the closed session.
- This has made it difficult for traders to take big positions and exposed them to potential danger.
On Monday, the market will react to the job numbers that will give us an insight into whether the employment situation in the United States is slowing down. The market is keen on this because it could give the Federal Reserve some room to start loosening monetary policy, or at least start the idea of pausing interest rate hikes. However, it is unlikely that the market will get what it wants, even though it may trade like that. The Federal Reserve has reiterated its commitment to staying tight, but ultimately, the market will do whatever it decides it wants to do.
The 50-Day EMA has recently broken above the 200-Day EMA, signaling a golden cross, but it’s still early in that type of indicator. Moreover, both moving averages had been very flat. Therefore, we need to see a strong signal to the upside to confirm the bullish signal. If the market turns around and takes out the 4200 level, then we could very well see a race to the upside. But as things stand right now, the market is essentially hanging around the same area, so it’s very possible that we could see this market being range-bound in the meantime. The 3900-level underneath could be a bit of a support level, so if we do start to break down, that’s probably as far as we would go.
The market is currently in a situation where potential risks are mounting, including rising inflation, supply chain bottlenecks, and geopolitical tensions. The market is also pricing in the possibility of a policy mistake by the Federal Reserve, which could cause a major sell-off. However, there are still many investors who believe that the current bull market will continue, and they are buying every dip.
Despite the current uncertainties, it’s important to remember that the market is always looking ahead. As such, there may be opportunities for traders and investors who can identify long-term trends and take positions accordingly. Ultimately, the market is unpredictable, but with a solid trading plan and the right risk management strategies, traders can still succeed in any market environment.
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