- During the trading session on Tuesday, we have seen the S&P 500 try to rally but gave back most of the gains.
- This should not be a huge surprise, mainly due to the fact that the FOMC interest rate decision is coming out on Wednesday, and a lot of traders will want to be overly exposed to the markets in case there is some type of shock.
- Liquidity will dry up, and therefore it makes quite a bit of sense that the stock market itself might struggle.
Massive Channel
We have been in a massive channel for some time, so it’s not a huge surprise to see that the market might continue to simply go higher, but a short-term pullback makes quite a bit of sense that we would see that the 6500 level could offer support, assuming that we drop that far. On the other hand, if we break above the top of the shooting star candlestick for the session, then it opens up the possibility of a move to the 6700 level.
Keep in mind that there are a lot of concerns about the US economy, but retail sales came out at 0.6% instead of the expected 0.2%, so it’s obvious that American consumers are still out there buying, so it could continue to drive the market higher as well. It’ll be interesting to see what the Federal Reserve has to say, because so far, they haven’t been that clear. There is the likelihood of an interest rate cut on Wednesday, but the question then becomes “What are they going to do for the rest of the year?” At this point, I favor to more cuts, and if they say anything that suggests they are going to do that, it could be negative for the S&P 500. I would expect a little bit of shift sometime during the day in order to get out of positions, and the beginning of that probably happened late during the day on Tuesday anyway. Pullbacks should continue to be buying opportunities.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
