Stay calm. The S&P 500 still has some work to do
Yesterday was a good day for the market. The S&P 500 managed to break through an important resistance that has been halting the market the last days now. This resistance was important as it held back a recovery after the pullback following the three mountain tops that have formed at the major resistance of the last few months. This resistance is the top of the internet bubble and therefore a HUGE resistance to overcome. A move today, similar to the move yesterday might break through that resistance and keep the markets moving in a favourable way into the future.
But, there’s always a but. When looking at the stochastic for the monthly, and daily charts of the S&P 500 Futures, the market is still in a overbought status and therefore is due for a rest or in the worst case, a pullback. This market has been fighting to get an upward move to continue but has, until now, been unable to gather up the force needed to push the prices past the resistance points.
We are looking at this week, and if the market is unable to push through the resistance, the psychological effect might be to much for the it. The push of yesterday was a long awaited “good news” for the market, but the market has had better days during the last months. The market just needed one now, and the move took the market quite close to the big resistance.
I don’t want to sound to pessimistic, but the fight is not over. Maybe the market has got the momentum and the force to break through and maintain that position, but I’m not convinced. There’s a lot of work at hand and it’s going to be difficult. The commentators are optimistic from a fundamental point of view, but according to the technical indications, the market is not ready yet. At least not for a big breakthrough. A breakthrough would, no doubt, be the best solution for everyone. I doubt the US is ready for a recession and a prolonged war in the months to come. a condition that have a major effect on the rest of the world markets. But the indications are there.
