S&P 500 Signal: Looks for Hope Regardless

You are likely to see a lot of erratic trading, because quite frankly it’s a lot of people out there trying to read the mind of somebody they don’t even know.

• The S&P 500 bounced from the 50-Day EMA during the trading session on Monday, showing signs of life, and therefore I do think that Wall Street is coming back to try to pick up a bit of value. At this point, we could go looking toward 4600 level, but it may take a little bit of help from some earnings.
• All things being equal, the short-term pullbacks offer buying opportunities.
• The 4400 level underneath is going to be crucial, and I think at that point you probably will see quite a bit of value hunters down in that area.
• Keep in mind that there are a lot of questions about inflation as well, and you will need to pay close attention to the CPI figures that come out in the middle of the week to get an idea as to how Wall Street may be putting money to work.

On the upside, we could reach an all-time high yet again, and quite frankly it looks like Wall Street is willing to overlook the actual economy at the moment, and that is something that will be needed in order to continue going higher. Quite frankly, I think it’s obvious that there are a lot of traders out there trying to chase performance, and that in and of itself will make a huge difference as to where markets may go.

Ultimately, a lot of this is going to come down to what the rest of the data shows, but right now a lot of traders will be paying close attention to the Federal Reserve and any statements that come out. We do know that it’s likely we see another interest rate hike in November, but the statement and the so-called “soft data” for the announcement will have a major influence on what happens next, as traders will try to read between the lines of any statement that comes out of the Fed. Because of this, you are likely to see a lot of erratic trading, because quite frankly it’s a lot of people out there trying to read the mind of somebody they don’t even know.

Potential signal: Buying stocks is what Americans do. At this point, it looks like a dip should offer buying opportunities, and therefore near the 4400 level I will be buying. I would aim for 4520 and have a 50-point stop loss.

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