• The S&P 500 experienced a drop during Friday's trading session, with a weekly chart indicating a shooting star formation.
• Currently, the market is hovering around the 50-Day EMA and 200-Day EMA, both of which are flat.
• This suggests that the market is in a holding pattern, waiting for the Federal Reserve to bail them out.

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There are several macroeconomic concerns that could hinder the stock market's takeoff. The Federal Reserve has offered too much liquidity for over a decade, making it difficult for traders to function without cheap money. Furthermore, companies are heading into a period where they cannot buy back their own stocks, negatively affecting the market.

With the market primed for more drops than rallies, fitting short-term rallies as they occur is an advisable strategy. This is especially true if the US dollar strengthens, which typically works against the value of stocks in America. That being said, there is a lot of concern out there when it comes to growth worldwide, and that’s probably the most important thing to pay attention to. Furthermore, the Federal Reserve remains very tight with its monetary policy and has Offered no signs that it was going to pull back from that, so that could continue to weigh upon stocks going forward as well.

Looking for Fading Signs of Exhaustion

The 3900 level provides slight support, but the 3800 level is even more supportive. It is an area where a swing low caused buying last time, indicating a potential return to that level. If we do reset level, breaking down below it would be significantly negative to send this market down to 3700 level rather quickly, perhaps even as low as the 3600 level.

At the end of the day, the stock market is facing several macroeconomic challenges that could prevent it from taking off. Traders are waiting for the Federal Reserve to intervene, but it is unlikely to happen soon. With companies unable to buy back their own stocks and the market primed for more drops than rallies, short-term rallies present an opportunity to fit. The 3800 level is a crucial support level that could lead to potential buying opportunities. As the market remains in a holding pattern, it’s very likely that you will see more of a range-bound trade play out than anything else, but I do prefer fading signs of exhaustion after short-term rallies more than anything else at this point.

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