S&P 500 Price Forecast – Stock Markets Test Major Support Level

S&P 500 traders had a rough going of it early in the day, reaching down towards the 50 day EMA only to test the uptrend line yet again. Ultimately, this is a market that has been rocked by recent options move in various heavily shorted stocks, causing all kinds of financial chaos. Because of this, I think it is only a matter of time before we see some type of recovery, due to the fact that the global reflation trade and the stimulus situation still favors higher stock prices. That does not mean it is going to be easy though, and quite frankly I think at this point what we are seeing is a proclivity to buy the dips going forward. However, we may have some noise to get there in the meantime so be very cautious about over leveraging yourself.

S&P 500 Video 01.02.21

If we do break down through the trend line, I expect the market to go looking towards the 3600 level for some kind of support, where I would anticipate a lot of psychological and structural money coming into the fray. As you know, I have no interest in shorting indices because quite frankly they are not equally weighted, so it is a bit difficult to short an index as it is essentially the “S&P seven”, not the S&P 500. With this being the case, I continue to buy dips, but I need to see some type of recovery or stabilization first before I get too aggressive.

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