S&P 500 Technical Analysis

The S&P 500 fell a bit during the early hours on Tuesday as it looks like we are going to continue to consolidate and perhaps work off some of the froth from the move higher. Ultimately, this is a market that I do think eventually goes higher. And in the short term, I’ll be paying close attention to 5200 as it is an area of previous resistance and should now have a certain amount of support.

Ultimately, I think this is a buy on the dips type of market and I think the traders out there will continue to see the idea of finding value to be very appealing. After all, the S&P 500 is moving mainly on the idea that we will be getting rate cuts later, and that should free up more capital to go looking for speculation.

That’s been the game we’ve been playing since the great financial crisis, and it’s obvious that Wall Street still wants to play this game. Above we have the 5,300 level, and I think that’s your short-term barrier, but there’s nothing particularly special about that number, and I think they will eventually blow through it. With the jobs number coming out on Friday, that could greatly influence what we do over the next couple of days, but I still look at this through the prism of buying on the dips.

I think that’s the only way you can trade this market, at least until we were to break down below the 5,000 level, which would have a certain amount of psychology come out and show itself into the market. But even then, I don’t know that it would be the end of the trend. We just don’t have the fundamental reasoning for the S&P 500 to sell off drastically. There’s a lot of complacency in this market, that’s nothing new.

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