• The S&P 500 (SPX) did very little in the early hours on Tuesday, but quite frankly we are just in the midst of consolidation after a huge move higher.

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• Keep in mind that the 5300 level is the middle of the market right now, and of course as it is a large, round, psychologically significant figure, it does make a lot of sense that we would continue to look at it as a bit of a magnet for price.
• With this, the longer that we stay in this general area, the better this could end up being for the S&P 500 as people gain even more confidence in the overall uptrend.

Short-term pullbacks should continue to attract a certain amount of attention, as we have seen a lot of value hunting come back into this market every time that there’s an opportunity, and I do believe that the S&P 500 index will continue to grind higher overall, if for no other reason than the fact that we have seen very little in the way of surprises on earnings recently, and then of course we have no major economic announcement until Friday, which is the PCE numbers, which of course the Federal Reserve seems to pay quite a bit of attention to in order to determine where inflation is for your typical American.

Buying on the dips

I think at this point in time, you continue to buy on the dips as the market shows so much in the way of support every time it does pull back, and of course there’s no real change in the overall attitude of markets. If we can break above the 5350 level, then I think it will bring in more momentum into the market, and therefore will be interesting to see how that plays out in general. At that point, I suspect that the S&P 500 could very well go looking to reach the 5500 level, which is my target over the next several months.

I do expect quite a bit more volatility, mainly due to the fact that there are so many moving pieces at the moment, and of course there is always a bit of a risk when it comes to geopolitics. However, markets tend to move on momentum more than anything else, and the momentum is certainly to the upside right now.

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