(MENAFN– Daily Forex) The S&P 500 rallied significantly on Friday to reach towards the 8700 level. However, we have pulled back just a bit towards the end of the day as traders took profits heading into the weekend . This is not a huge surprise, because eventually gravity has come back into the picture. Any pullback at this point should see plenty of support, especially near the 4600 level. That is an area that I have marked on the chart and was a breakout from the previous all-time high. Furthermore, we also have the 50-day EMA reaching towards that area, so I think it all comes together quite nicely in order to give us an opportunity to pick up little bits and pieces of value along the way on pullbacks.
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If we break above the top of the candlestick, then obviously it would be very bullish, but I am not comfortable getting long of a market that is so overextended. I would like to see some type of value offered, and the shape of the candlestick is not quite a shooting star, but it is close enough to lead me to believe that it is only a matter of time before we do get that pullback. I look at every pullback as an opportunity to pick up a little bit of“value”, as the S&P 500 is more than likely going to go looking towards the 4800 level.
Underneath, we would need to break below the 4250 level for me to think that the trend was over, and even then, I would not be short of this market. I might be a buyer of puts, but that would be about it. After all, Jerome Powell and the Federal Reserve will step in and do whatever they can to pick up the markets as they start to fall too much. Yes, the Federal Reserve is starting to tighten via lessening the bond buyback program, but at the end of the day it is such a small change that the traders on Wall Street feel very comfortable continuing to buy stock markets overall. Ultimately, this is a market that looks very strong, but again we need to find some type of support underneath. At this point, we are very positively driven, but we need to print at least a couple of red candles.
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