S&P 500 Price Forecast – S&P 500 Continues to Look Strong Despite Pullback

S&P 500 Technical Analysis

Looking at this chart, it’s easy to see that the market has been extraordinarily bullish for some time. So, this pullback, I believe, will end up offering an opportunity for those willing to be trend followers. That doesn’t necessarily mean that you jump in with your entire account, but it certainly looks like a market that’s probably going to offer enough value to attract traders given enough time.

We are starting the earnings season in the United States and that obviously will have its say, but there is a massive amount of support at multiple areas underneath the 5,600 level would be the first one. And then after that, we have a much more substantial one, the 5500 level where the 50-day EMA is rapidly approaching. This of course is assuming that we would sell off that far. I don’t think that’s necessarily going to be the case.

More likely than not, traders will continue to buy the dip as momentum dictates that’s what they are doing. We would need to see a complete shift in the narrative to see this market fall apart. And quite frankly, we’ve been hearing calls for a 10 to 20% drop in the S&P 500 since this rally began in late October. The biggest problem with that, of course, is that the index is not equal weighted, so therefore it is not designed to fall. Given enough time, the same handful of stocks will continue to push this market higher, and even if they don’t, rotation can cause this to happen.

If traders, for example, are selling, a good example would be Nvidia, that has such a huge weighting on the index, it does bring it down a bit, only to be replaced by other companies that they are buying. They may take those profits and put money into three different stocks, and eventually the index corrects itself. So, we’ll have to wait and see how this plays out, but clearly this is a market that only a fool would be shorting right now, so it’s buy on the dip. You’re just looking for some type of short-term bounce to perhaps dip your toe in the water.

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