The S&P 500 remains very bullish so I do not like the idea of shorting although we could see the occasional short-term pullback.

The S&P 500 rallied a bit during the trading session on Monday to break above the top of the hammer from the previous session on Friday, suggesting that the 3900 level will retain some important. Furthermore, we are closing towards the top of the range so that is a good sign, but you also have to look at the Thursday candlestick through the prism of whether or not it was a significant warning signal. If we were to break above there then we need to challenge the 4000 handle, which of course will be a large, round, psychologically significant figure that a lot of options will be based upon. In other words, it will more than likely be very noisy to say the least.

On the downside, I believe that the 3900 level will continue to be supportive, but then the 50 day EMA will be the next support level. After that, then we could be looking at the 3800 level, followed by the 3700 level. All things being equal, the S&P 500 remains very bullish so I do not like the idea of shorting although we could see the occasional short-term pullback. In fact, even though we have Jerome Powell speaking over the next couple of days in front of the United States Congress, I have no interest in trying to short this market because I doubt, he is going to say anything to spook it too much.

Even if he did do something to rattle the markets, it will be short-term at best. He has learned over the last several years that the markets will throw a tantrum if he does not say the right thing and has been trained accordingly. With that in mind, I believe that if we do get some type of significant selloff it is only a matter of time before we find support that we can take advantage of from a longer-term timeframe. Eventually, I do believe that we will break above the 4000 handle which could open up another 100 points going forward, but it is going to take a significant amount of effort to get above that level, so I think in the short term we are looking at a lot of choppy and sideways behavior. In general, this is a market that I think continues to be positive but noisy to say the least.

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