S&P 500 Price Forecast – Stock Market Continues to Consolidate

S&P 500 Technical Analysis

On Thursday, it is a very quiet market heading into the New York session as we wait for the PCE figures. That being said, that could cause quite a bit of noisy behavior in this market, which makes quite a bit of sense as the PCE numbers are one of the biggest inputs that the Federal Reserve uses for inflationary expectations. The entire world is focused on the idea of whether or not the Federal Reserve will end up cutting this year and by how many times.

And at this point in time, the Federal Fund’s futures rate suggests that we should get three quarter point cuts. The question, of course, isn’t so much whether or not that happens, but when it comes into play. After all, the Federal Reserve has to be very cautious about what they do here as cutting too quickly could be detrimental to the economy. Plus, the Federal Reserve has a long history of cutting too late and then being far too aggressive trying to chase a deflationary situation.

If inflation starts to drop off of a cliff and the economy starts to slow down quite drastically, the Federal Reserve is going to have issues, and while it tries to play catch up with the economy, the stock market will suffer. Not that I am suggesting that right now, but it is certainly something that you need to pay close attention to. As far as technical analysis is concerned, not much has changed here.

We are still looking at the 5,000 level as support right along with the 50 day EMA and then finally followed by the 4,800 level. This is a market that still looks very bullish but doesn’t necessarily have to get to its destination overnight, so keep that in mind. A little bit of patience will probably go a long way, and make sure that you are not overly levered in this market, due to the fact that we may get some erratic behavior after this huge run higher.

For a look at all of today’s economic events, check out our economic calendar.