The S&P 500 has rallied rather significantly during the day on Wednesday to break back above the 4250 level again, but it should be noted that there is a lot of noise above and quite frankly this looks more or less like a “relief rally” than anything else. I do not like the idea of buying this market in the short term, because quite frankly there are too many things out there working against it.

S&P 500 Video 10.03.22

Next week we have the Federal Reserve meeting, and there should be an interest rate hike attached to it. The real question is going to be how hawkish the central bank sounds, because if they do sound like they are hell-bent on raising interest rates aggressively, then it is very likely that Wall Street will puke up any gains that it has decided to give itself. On the other hand, if Jerome Powell is dovish, then it will send markets higher, lease for the short term.

The 200 day EMA currently sits at the 4391 level, and I believe that is going to be a barrier that is going to be very difficult to break above. If we did, that would obviously be a very strong sign but right now I just do not see that being the case. Signs of exhaustion will get sold into, but right now we may have a day or two of stabilization and/or recovery. Remember, markets do not go in the same direction forever and therefore you need to be very cautious about trying to chase a move that has already played out. If we were to break down below the bottom of the Tuesday candlestick, then I think we flush towards the 4000 handle.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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