S&P 500 Price Forecast – Stock Markets Looking Vulnerable Again

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The S&P 500 has initially tried to rally during the trading session on Thursday but gave back the gains to show signs of weakness yet again. At this point, if we break down below the lows of the previous week, I think that the markets will start to fall apart quite drastically, and I will be a buyer of puts as I suspect we will go looking towards the $4200 level. Underneath there, we also have the 200 day EMA coming into the picture so it certainly makes a certain amount of sense that we would see buyers in that area.

S&P 500 Video 01.10.21

As you know, if you been reading my articles for any length of time at FX Empire, I never short US indices due to the fact that central banks interfere so much. The Federal Reserve will jump in and save Wall Street if we lose more than 10%, I would be willing to bet my last dollar on it. Because of this, I buy puts, but also look for massive bounce is near the 200 day EMA to get involved with.

On the other hand, if we take out the highs of the week, then I would be a buyer as I would anticipate that the S&P 500 will go looking towards the 4600 level, and then perhaps even beyond. This is an uptrend, which so far has only seen a bit of consolidation. The question now is whether or not this is a distribution pattern, or if it is simply the markets chopping around and try to figure out where to go next? Your position size will be paramount.

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