(MENAFN- Daily Forex) The s&p 500 has rallied during the day, although in a relatively tight range. At this point, it looks like we are trying to do everything we can to go higher, so, therefore, it's prudent to look at this through the prism of whether or not it can break above the resistance barrier. The 4100 level above is the initial target on a move higher, but you also have to pay close attention to the fact that we are in the midst of earnings season, and quite frankly that can change things quite rapidly. Either way, I think most of what the Wall Street traders are out there paying attention to is whether or not the Federal Reserve is going to loosen monetary policy.
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I think they're going to be very disappointed on February 1, which is the next announcement by the federal reserve , that's next Wednesday. It's not so much the interest rate hike that they won't like so much, but it is the statement by Jerome Powell afterward. I suspect that he will do everything he can to crush risk appetite, but whether or not Wall Street pays attention to he might be a completely different question altogether. After all, they have done everything they can to keep the market from getting overly aggressive, but Wall Street continues to do everything it can to come up with some type of narrative.Be Cautious About Shorting
At this point, I think it's probably worth noting that as long as Wall Street chooses to ignore Jerome Powell, there's not much he can do other than keep monetary policy tight for longer than they anticipated. Quite frankly, I think that's going to be the case going forward anyway. At this point, you need to be very cautious about shorting, but I would not jump in with both feet to the outside either. This is a very nimble market right now, so it's about day trading.
However, we continue to see bullish pressure after the February 1 meeting, because again, Wall Street will find a reason to get bullish as they always have. This is why it's so difficult to short indices because quite frankly Wall Street and most traders in New York have groupthink, which is that stocks always go higher. That may not be the case later this year, but right now they certainly are making that argument.
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