S&P 500 Forecast 03/09: Drifts Lower In Trading (Video)

(MENAFN- Daily Forex)

• The S&P 500 has dropped pretty significantly during the pre-market trading on Tuesday, as we lost about 1.27 % just before market opening already in electronic trading overnight in Asia and Europe.
• The question at this point is whether or not we are going to continue to fall towards the 6,350 level or the 50 day EMA before we turn things around and start bouncing again. At least that's the thought process.
• That being said, keep in mind this week is going to be a little bit different due to the fact that we weren't at work on Monday in the United States. And of course, the fact that the non-farm payroll announcement comes out on Friday.

The Fed and Stocks

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There are a lot of questions right now about what the Federal Reserve is going to do, not necessarily whether or not they will cut, but the question is, how often will they cut? Market participants have been excited about all that cheap money coming back to Wall Street. But when we finally do start cutting, a lot of times that signals that there's something serious going on in the economy, and that will cause some hesitation.

As things stand right now, I suspect we're probably looking at a potential correction and quite frankly, that's not a bad thing. This is a market that's been pretty relentless since the middle of May in the channel that we're trading in now and really has been relentless since it bottomed out in April. Ultimately, markets don't go in one direction forever. So, I think a little bit of a pullback probably helps us quite a bit as far as the sustainability of any uptrend. Your garden variety 3%, maybe 5%, possibly even as much as 10 % pullback I would think would be welcomed here. I expect a lot of choppy behavior. And I would also point out the volume starts to pick up again, especially next week, once we get the jobs number out of the way. As institutional traders will be coming back from vacation season. So could be an interesting couple of weeks. I still favor the upside, but I'm looking for value. I'd like to see a pullback.

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