The S&P 500 has gapped lower to kick off the trading session on Wednesday, only to turn around and form a bullish move as we then filled the gap. At that point, we dropped rather significantly and now it seems as if we are trying to find buyers underneath, and there are multiple areas where I think we could see that. The 4200 level is a very significant support level, as it is a large, round, psychologically significant figure and of course features the 50 day EMA. The market tends to move in 200 point increments, and therefore I believe that the target right now is 4400 above.
S&P 500 Video 08.07.21
Even if we break down below the 50 day EMA, the market is likely to go looking towards the uptrend line. If we break down below the uptrend line, then we will go looking towards the 4000 handle where there is a small gap to support the market and of course there is a lot of psychology attached to a big figure like that. Beyond that, we are starting to see the 200 day EMA that level, so needless to say that would also be significant support.
Buying on the dips has worked for most of the last 13 years, and there is nothing on this chart that tells me it is going to be any different in the short term. The bond markets have seen a bit of a plunge in rates but will have to see whether or not that sustains itself. If it does, then you probably do better in technology stocks or technology heavy index like the NASDAQ 100.
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This article was originally posted on FX Empire
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