S&P 500 Forecast: Looks Ready to Breakout
- The S&P 500 was positive during the trading session again on. Thursday, but really at this point in time, it's a situation where traders continue to see a lot of buy on the dip mentality, the GDP numbers, of course, in the United States came out hotter than anticipated.
- Now we have to look forward to the PCE price index numbers month over month.
- That is a major indicator that the Federal Reserve pays close attention to.
Whether or not the cutting will have to be aggressive might be addressed in that announcement. As things stand right now, a lot of traders believe that the Fed fund futures are pointing towards a 100 basis point cut between now and the end of the year, which quite frankly is not a good thing. That ultimately won't benefit. Stocks mainly due to the fact that if they have to do that, it's a very strong sign that perhaps there's something seriously wrong with the economy. Granted, wall street is full of very unintelligent people who base their trading decisions on liquidity and not the economy, but eventually the economy catches up.
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1The Reality is Different
The reality is that anywhere west of the East River and before you get to Silicon Valley, there's a lot of problems in the United States. That doesn't mean that stocks can't go higher between now and the actual realization. It just means that this rally is getting way too overextended. In the short term, I do think that we will find any excuse to break out to a fresh new high.
Longer term, I do think that a deep correction is coming, but we just don't have the catalyst for it yet. Ultimately, if we can break above the 5,675 level, then I think the S&P 500 rockets much higher. Short term breakdowns from here more likely than not going to be of the pullback variety as we would go looking to the 50-day EMA which is Just below the 5500 level.
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