(MENAFN- Daily Forex) The s&p 500 has pulled back just a bit during the trading session on Wednesday, as we continue to consolidate overall. By doing so, it suggests that the market is likely to continue seeing noisy behavior, and therefore I think we have to continue to look at the 4200 level above as major resistance, and the 4100 level underneath that short-term support. However, I do think that it's very possible that we see a lot of downward pressure that could break down to the 4000 level. The 4000 level is much more important from what I can see.
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Down at the 4000 level, you have the 50-Day EMA, and of course, the 200-Day ema sitting right at the previous downtrend line from the channel. That should offer a little bit of interest for traders, and therefore I think they will be paying close attention to this area.Trying to Find Value
Ultimately, I think this is a situation where you must try to determine whether we have enough momentum to go higher in the longer term as the traders on Wall Street certainly seem to be hell-bent on employing a“buy on the dip” strategy regardless of what the economy or the Federal Reserve is going to do. In this environment, it's almost impossible to find momentum. The market is just simply running on momentum, and not necessarily anything that would suggest something that we can hang on to with any conviction.
We are in the midst of earnings season, so that will course continue to offer volatility, as the earnings will continue to have traders betting on the forward economy. Even beyond earnings, a lot of what we will be looking at is the commentary from CEO conference calls as far as the forward guidance will be. Ultimately, you have to be cautious with this overall type of noise, because it seems like a lot of games are being played in the options markets, which of course can cause ache as well. With that being said, I think it's a situation where you probably have to look at this through the prism of trying to find value, but you cannot get married to any one particular position. If we break down below the 4000 level though, that could signal a major drop just waiting to happen.
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