• The S&P 500 pulled back a bit during the trading session on Wednesday again, as the 4000 level continues to offer a bit of resistance.
• Furthermore, we also have the 200-Day EMA, which of course attracts a lot of attention in and of itself. The fact that we formed a shooting star during the previous session suggests that perhaps we are going to continue to struggle in this area.
• Beyond that, we are also during the earnings season, so therefore a lot of companies are out there reporting, and not everything is exactly peachy.

Looking at this chart, I think that we have gotten a bit overextended, but what I would really pay attention to is the fact that we shot straight up in the air after that CPI number last week and have simply done nothing since. What does this say? Does it suggest that the market is simply trying to work off some fraud, or is something wrong? I suspect that negativity is about to enter the market again because there’s absolutely no follow-through, and of course, the Federal Reserve remains rather stubborn with its monetary policy.
 

Follow Prices

 If they remain tight, I just don’t see how stocks take off to the upside. Furthermore, forward guidance has been miserable as well. It is going to be the case, then I think there is going to be a dark cloud overhanging the market, and I think that continues to be the case. However, you have the following price even if it goes against what fundamentals say.

In that scenario, if we break above the top of the shooting started it would close from the Tuesday session, then it’s possible that we could investigate the 4150 level. After that, we have the 4200 level, followed by the 4300 level. Ultimately, this is a situation where you have quite a bit of negativity out there, and even though we have had such a nice run to the upside, it does make quite a bit of sense that the market probably pulls back a bit as the momentum has taken a backseat over the last couple of days. I think at this point, we are simply looking for the next catalyst to tell us which direction to go. For what it is worth, retail sales suggest during the session on Wednesday that the Fed still has further to go.

(Click on image to enlarge)

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