S&P 500 Forecast: Falls Again On Tuesday

  • The S&P 500 has fallen again during the day on Tuesday as we continue to see traders start to weigh the idea of higher interest rates for longer as a potential negative catalyst.
  • At this point, it looks like the 3950 level could be an area of interest, but there’s probably more support at the 3900 level. The 50-Day EMA sits just above the 3900 level, so that adds even more credence to the idea of that area offering support.
  • Ultimately, this is a market that I think will continue to be very noisy, but I believe that the market is probably going to be watching a lot of different things at the same time.

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To begin with, we are watching interest rates during the day on Tuesday rise, so that is positive for the US dollar, and therefore typically negative for stocks. It’s also worth noting that we are forming a bit of a “broadening wedge”, so it’s possible that might be a technical reason to see a little bit more in the way of negativity. , it’s also worth noting that we are below the 200-Day EMA and above the 50-Day EMA, which typically means that we are going to see a lot of noisy behavior. I think the market will probably continue to see a lot of volatility, and therefore you need to be cautious with your position size.

Risk Appetite is All Over the Place

I do believe now you will have to look at this through the prism of risk appetite, and risk appetite is all over the place now. Because of this, we could see a situation where the market has erratic moves based on the overall attitude of traders in general.

On the upside, if we were to take out the highs, then the 4200 level comes into the picture. The 4200 level would be a difficult hurdle to overcome, and quite frankly probably doesn’t happen unless the Federal Reserve explicitly states that the monetary policy is going to become a lot less rigid during the announcement next week. If they do in fact sound like they are going to loosen their grip on the markets, then it’s possible that the stock market has further to go. Ultimately, I think you are looking at a choppy market over the next couple of days as we are approaching the bottom part of what I think is the short-term range.

S&P 500


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