S&P 500 is at the critical level of 4100 and 4200. This level has served as both strong support and strong resistance.
The short-term price trend is up but the mid-term is down. This is the first red candle since FOMC decision day.
Dip buyers are still present, although weakening
Although the S&P price is currently overbought, the real question is that will it create a higher low and rally further beyond 4200.
OR will it break down back to sub-400 level.
A breakout above 4200 would mean a higher high is created on the bigger trend which will indicate a shift from a downtrend to an uptrend. This will be a major shift in the trend and as such, there needs to be a fundamental tailwind or catalyst to trigger this shift.
The downside to sub 4000 represents "trading with the bigger trend" as the short-term uptrend has comes to an end. Many short-term uptrends have ended within this bigger downtrend.
If you are a bull and are in profit, this is a good time to cash out some of your profits.
If you are only thinking of playing long on the index, you are horribly late. You may want to wait for a retracement and reaccess the situation.
For traders who are bullish on prices heading above 4200, it will be good to think of any possible fundamental catalyst to support your view. Technical won't help much here.
S&P 500 has rallied 500 points from the bottom due to the expectation of a Fed Pivot. Earnings (although not great) from Apple, Amazon, Microsoft, Google, and Tesla have contributed to this big rally as well.
Expecting further rally beyond this level would require something else. What else is there? Job Numbers? August CPI prints?
If you are a bear, you can safely "trade with the trend". Although the burden of proof falls on the bulls, you may want to also pay attention to the fundamentals to ensure you are not shorting into a bigger trend shift. You may also want to wait for more downside momentum before initiating a short.
The short-term price trend is up but the mid-term is down. This is the first red candle since FOMC decision day.
Dip buyers are still present, although weakening
Although the S&P price is currently overbought, the real question is that will it create a higher low and rally further beyond 4200.
OR will it break down back to sub-400 level.
A breakout above 4200 would mean a higher high is created on the bigger trend which will indicate a shift from a downtrend to an uptrend. This will be a major shift in the trend and as such, there needs to be a fundamental tailwind or catalyst to trigger this shift.
The downside to sub 4000 represents "trading with the bigger trend" as the short-term uptrend has comes to an end. Many short-term uptrends have ended within this bigger downtrend.
If you are a bull and are in profit, this is a good time to cash out some of your profits.
If you are only thinking of playing long on the index, you are horribly late. You may want to wait for a retracement and reaccess the situation.
For traders who are bullish on prices heading above 4200, it will be good to think of any possible fundamental catalyst to support your view. Technical won't help much here.
S&P 500 has rallied 500 points from the bottom due to the expectation of a Fed Pivot. Earnings (although not great) from Apple, Amazon, Microsoft, Google, and Tesla have contributed to this big rally as well.
Expecting further rally beyond this level would require something else. What else is there? Job Numbers? August CPI prints?
If you are a bear, you can safely "trade with the trend". Although the burden of proof falls on the bulls, you may want to also pay attention to the fundamentals to ensure you are not shorting into a bigger trend shift. You may also want to wait for more downside momentum before initiating a short.